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13 Jan 24

UCC Lien Search: Finding and Understanding UCC Filings

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Last Updated on: 17th January 2024, 04:51 am

Finding and Understanding UCC Filings

So you need to do a UCC lien search? Don’t worry, I gotchu. A UCC filing can seem mad complicated but it’s really not so bad once you know what you’re looking at. Let me break it down for ya real quick.

First things first, UCC stands for Uniform Commercial Code. I know, boring acronym. But basically it’s this set of laws that governs commercial transactions in the US. And one important part of the UCC is that it allows lenders to put liens on personal property as collateral for loans. Ya feel me?

Like let’s say you own a small bizness. And you wanna take out a fat loan from the bank to buy some new equipment or something. Well the bank might make you put up some of your other assets as collateral, so if you default on the loan they can seize those assets and sell em to get their money back. Not ideal obvi. So that’s where UCC filings come in.

What’s a UCC Filing?

A UCC filing is basically a public record showing that a lender has an interest in some of your personal property. By filing a UCC form with the Secretary of State’s office, the lender is putting other creditors on notice that they have a lien on your stuff.

Now you’re probably wondering why you’d wanna let some rando lender put a lien on your assets. Fair question. The thing is, it makes you look more creditworthy when you apply for financing if you can offer up some collateral. So sometimes biz owners will agree to these UCC liens in order to get better loan terms and whatnot. Sneaky lil trick, ain’t it?

How to Do a UCC Search

Now as the borrower, you’ll probably wanna do a UCC lien search before taking out any loans backed by your personal property. Just to see if there’s already any existing liens that the new lender might not know about. No bueno to get hit with any surprises down the road, ya feel?

Luckily UCC filings are public record, so doing a search is pretty straightforward. Each state has an online UCC lien search database you can access directly. But there’s also some paid services like UCC Filing Services that’ll compile records from multiple states into one easy search. Mad convenient.

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To do the search, you’ll just need the name of the individual or company that owns the collateral. So if you’re checking your own assets, obvi search your own name. You can also search by the tax ID of a registered bizness. Throw that info into the database and see what turns up. Easy peasy.

Reading UCC Lien Filings

A’ight so you done your search and some UCC records popped up. Now what? Well each filing should give you a bunch of key details, including:

  • The name & address of the debtor (that’s you, the borrower)
  • The name & address of the secured creditor (the lender)
  • A description of the collateral
  • The date of filing

You’ll wanna scan through and make sure all the identifying info checks out. Double check your name and address obvi. Then take a peek at what assets specifically they’ve got a lien against. Could be equipment, inventory, accounts receivable…whatever business property you offered up.

Oh and peep the date of filing too. UCC liens generally expire after 5 years if they ain’t renewed. So if you see something old, it might not even still be in effect. Sweet!

Can UCC Liens Be Removed?

Now if you do find an existing UCC filing on your assets, don’t freak out just yet! There’s definitely a few options to get rid of that pesky lien. Especially if it’s outdated or fraudulent or whatevs. Let’s discuss…

First things first, you can challenge incorrect info on the filing if there’s some kinda mistake. Say they put the wrong address or spelled ya name wrong. If it doesn’t seem legit, you can file paperwork to amend or remove it.

You can also negotiate with the lender directly to remove the lien in exchange for paying off your loan early or whatever. Might have to wheel and deal a bit but sometimes it works out.

If that don’t work, you may have to lawyer up and take formal legal action to invalidate the lien if you think it was unlawful or improper. But heads up – it can get messy quick. Might just be easier to pay off the loan instead of going to court. Ya dig?

Oh and last tip! Make sure to check your credit report too for any related red flags. An inaccurate UCC filing could def tank your score if it shows you defaulted on a loan or some mess. No bueno.

A’ight, I think that covers the basics on UCC lien searches! Lmk if you got any other ?’s. Mad easy once you get the hang of it. Just gotta poke around the databases a bit to see what turns up. Now you know how to sniff out any sketch liens on ya biz so you can handle that mess. Go get it!

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References:

UCC Financing Statements: What Small Businesses Need to Know

UCC Liens: Priority of Competing Creditors’ Claims