Navigating UCC Filing: The Essential Guide
An essential guide on how to navigate filing a UCC record
An essential element of conducting commercial transactions, mergers and acquisitions, and originating business loans is filing Uniform Commercial Code (UCC) financing statements. But even if you're a seasoned filer, it's possible to make subtle errors in the filing process—and that can spell disaster and result in unperfected security interests.
Tips
Although Article 9 was intended to make this process uniform, UCC filing rules can vary in each state.
And if you don't fully understand each state's nuances, you run the risk of making simple filing mistakes. To help, we've compiled an essential guide on how to navigate filing a UCC record.
When filing a UCC financing statement, the most important information on the record UCC form is the debtor's name. If the name is incorrect or includes even a minor deviation, it could render the financing statement seriously misleading. If the debtor is a registered organization, for example, the financing statement is sufficient only if it provides the name of the entity as stated on the public organic record most recently filed with or issued by a state or the United States as further described in UCC § 9-503(a)(1). Be sure to carefully check your punctuation and spelling on all UCC documents to avoid even minor deviations from the statutory rule. CSC can automatically help you track the state business organization data for debtor name changes with our UCC Debtor Tracking services.
The filing location for UCC records is determined by the law governing perfection under UCC § 9-307. That is ordinarily the law of the state where the debtor is located. A rule of thumb when filing a UCC record is to file at the central filing office of the state where the debtor is located. However, there are exceptions, such as when the UCC records is filed as a fixture filing.
It's important to keep state filing turnaround times in mind when you're filing a UCC record. Depending on how you're submitting—electronically, by U.S. postal mail, by courier, or in person—the filing turnaround time can be instantaneous (often in the case of electronic filing) or can take up to 30 days (in the case of paper forms filed in Vermont). Also, as states overhaul their systems, they may modify their requirements or turnaround times.
The UCC search is an essential element of due diligence for business loans and other commercial transactions. A lien or security interest may be indexed under a variation of the debtor name, yet remain fully effective. That's why it's so important to understand how to search the UCC records—and why you should partner with a UCC search provider like CSC. With the largest database of UCC information and images, CSC can conduct searches for you and uncover all relevant records. Don't forget to include copies, reconcile copies to the summary, review name variations, and look at terminated UCCs.
Search should include:
Current debtor name(s)
Prior debtor names
Any merged or acquired businesses
Former jurisdictions if applicable