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13 Jan 24

UCC Lien Search Tips: Finding Problem Filings on Your Business

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

UCC Lien Search Tips: Finding Problem Filings on Your Business

Doing a UCC lien search on your business is important to check for any liens or financing statements filed against your company. While most filings are legit, sometimes errors or fraudulent filings can happen. This article shares tips on spotting issues and what to do if you find problem UCC filings.

Why Do a UCC Search

A UCC financing statement gives notice that a creditor has a security interest in a debtor’s personal property. Basically it flags that property as collateral for a loan. Filings are public record and show up on a UCC lien search.

You’ll want to periodically search UCC records for any filings against your business. Most legit filings are no problem – just standard procedure for loans, equipment leases etc. But errors can happen. Or worse…fraudulent filings that falsely tie up your assets.

How to Do a UCC Search

UCC records are held by the Secretary of State office in each state. You can:

  • Search yourself on the SOS website
  • Hire a company to run searches for you
  • Use online services like CT Advantage

Search in your home state and any states where you have property or do business. That casts a wide net to catch all filings.

Spotting Problem UCC Filings

Dig into UCC search results to watch for any fishy looking financing statements. Be extra diligent if you find filings that:

  • Are totally unfamiliar/for debts you don’t recognize
  • Tie up substantially all assets vs. just specific collateral
  • List suspicious loan details (odd lenders, amounts etc.)
  • Have errors – wrong company name, fraudulent signatures etc.

Also take note if multiple statements come from one filer. That could indicate someone targeting your business.

If You Find Errors or Fraud

First, try contacting the filer directly to understand the situation. Many legit errors happen accidentally and the parties involved will want to correct them.

If that doesn’t work, you can dispute a fraudulent lien. The process varies by state but may involve:

  • Filing a correction statement
  • Sending a demand/intent to litigate notice
  • Going to court to challenge the lien

Be ready to show proof the lien is bogus – fake signatures, no supporting loan docs etc. The standard to successfully dispute often comes down to the burden/standard of proof.

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Preventing Problem Filings

While no system is foolproof, there are steps to help avoid issues:

  • Search UCCs regularly to catch problems early
  • Have tight controls on who can sign financing statements
  • Watch for red flags like odd requests for signatures/company financials
  • Educate staff on potential fraud schemes to spot trouble

Periodic background checks on new vendors/creditors also helps avoid issues.

The Takeaway

Keeping tabs on your UCC filings shields against errors and fraud that could tie up company assets. If you do find problem financing statements, act quick using the tips above to clear things up.

With some diligence on your part, UCC liens don’t have to lead to major headaches.

Sources:

What is a UCC Financing Statement?

What is the Burden of Proof?

Tips for Hiring a Private Investigator