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Terminating UCC Liens from Old Business Loans: Dos and Don’ts

March 21, 2024 Uncategorized

Terminating UCC Liens from Old Business Loans: Dos and Don’ts

Dealing with an old UCC lien from a previous business loan can be confusing and stressful. A UCC lien allows the lender to claim your business assets if you default on the loan. Even after paying off the loan, many small business owners discover these liens were never released. Fortunately, there are steps you can take to terminate a UCC lien.

What is a UCC Lien?

A UCC lien is a legal claim on your business assets filed by a lender with the Secretary of State’s office. It gives them rights to seize inventory, equipment, accounts receivable or other collateral if you fail to repay the loan as agreed.UCC stands for Uniform Commercial Code, which is the standard set of state laws governing commercial transactions like secured loans. All 50 states have adopted versions of the UCC.

Why Terminate a UCC Lien?

If you’ve paid off an old business loan but discover the associated UCC lien was never released, it can cause several problems:

  • Makes Getting Financing Harder – Active liens negatively impact your credit and make other lenders less likely to approve you.
  • Hurts Ability to Sell Assets – Buyers may walk away if they see your equipment is still collateral for an old loan.
  • Indicates You Defaulted – To the outside world, an active lien signals you failed to repay a lender as agreed.

Clearly terminating inaccurate or outdated UCC liens helps resolve these issues.

Dos and Don’ts for Removing UCC Liens

Follow this checklist to correctly terminate UCC liens from old commercial loans:

Do Review All Loan Documents

  • Verify the loan balance is fully paid off and you have documentation proving this.
  • Confirm the lender has no remaining security interest or claim on the collateral.
  • Carefully read the loan contract’s terms for releasing the lien.

Do Contact the Lender

  • Send a formal written request asking them to file a “UCC Termination Statement” .
  • If they confirm the lien should be terminated but don’t act quickly, follow up persistently.

Do Check UCC Records

  • Search UCC records to see if the lender filed the termination statement.
  • Look for the original UCC lien using your business name and EIN to retrieve the file number.
  • If a termination statement exists, the lien is officially released.

Don’t Try to Remove Liens Yourself

  • Only lenders can terminate UCC liens they originated. You cannot terminate a UCC lien by yourself.

Do Consult an Attorney

If the lender refuses or drags their feet releasing the lien, speak to a business attorney immediately. They can review the loan terms and send more aggressive lien release demands on official letterhead.

Do File Legal Action as Last Resort

If lender noncompliance continues, suing to compel them to release the lien may be your only recourse. An experienced commercial litigation lawyer can help obtain a court order officially clearing the invalid lien.

Christine Twomey
Christine Twomey
2024-03-21
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
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Brendan huisman
2024-03-18
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
2024-03-18
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
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2024-03-15
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
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Taïko Beauty
2024-03-15
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
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2024-03-12
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
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2024-03-12
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2024-02-28
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divesh patel
divesh patel
2024-02-24
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

Helpful Resources for UCC Lien Removal

Additional resources that provide guidance managing UCC liens:

  • Reddit Threads – Other small business owners share their real-world experience terminating old liens.
  • SBA.gov – The US Small Business Administration offers an overview of UCC liens in their Learning Center.
  • Nolo Legal Encyclopedia – This site covers UCC lien release best practices for small businesses.
  • SCORE Mentors – Retired business executives provide free UCC lien advice and loan document review.

With persistence and help from experts, you can resolve leftover UCC liens from repaid loans. Stay organized, document all lender communications, and don’t hesitate to get legal assistance to protect your business.

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RAJESH BARUA

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