ucc financing statement assignment

Check our Frequently Asked Questions.

What is a UCC financing statement and how to make sure it is bulletproof

21 July 2023

Table Of Contents

Contributors.

Filing a UCC financing statement is an important step in protecting one's rights to collateral and is often a critical element of business transactions. Knowing the ins-and-outs of filing a UCC financing statement is essential for ensuring that it is bulletproof, and AnyLawyer's suite of legal-tech tools make this process much easier and faster.

In this blog post, we will explore what a UCC financing statement is, list the type of filings associated with it, and describe how to file and search for a UCC financing statement.

The Uniform Commercial Code

The Uniform Commercial Code (UCC) is a set of laws that govern commercial transactions and contracts. Originally drafted in 1952, the UCC was adopted by all 50 states as a uniform set of laws governing business-related matters. This means that commercial contracts are enforced in the same way across the US. The UCC financing statement is one element of the UCC.

What is a UCC financing statement?

A UCC financing statement - also known as a UCC-1 financing statement or a UCC-1 filing - is a legal document that states that the filer has an interest in a particular asset or piece of collateral. It notifies anyone who searches public records that this asset is already encumbered, and provides legal protection for the holder of the security interest. Should the debtor default on the loan, the creditor might be able to seize the collateral.

The lien can be against a specific collateral, or it can take the form of a blanket lien, which applies to all of the debtor's business assets. Depending on the type of lien, different types of UCC-1 filings may be required.

What are the legal consequences of a UCC-1 filing?

By filing a UCC financing statement, the creditor notifies other potential creditors that they have an interest in the collateral. The filing creates an order in which assets can be seized, in the case of a defaulted loan or declared bankruptcy. Additionally, if the same asset is used as collateral in another loan, the first lender will be prioritized: the second lender will not be able to recover the asset unless the original lender is satisfied.

Types of UCC-1 filings

There are two types of UCC-1 filings: UCC liens against a specific collateral and UCC blanket liens. A UCC lien against a specific collateral is registered with the state and identifies the actual asset that is being used as collateral. This type of filing protects the creditor in cases where multiple assets are being used as collateral, such as when a vehicle is bought with an auto loan but secured by other personal property owned by the borrower.

Specific collateral can come in the form of movable objects, such as cars, boats, and jewelry, but it can also include investment securities, receivables, and intellectual property.

A UCC blanket lien provides protection against all the debtor's business assets, regardless of type or location. It is often used when a large number of assets are involved, such as in the case of corporate loans taken by small business owners that put their entire business up as collateral. If the borrower defaults, the creditor has the right of recovery on all assets, up to the value of the debt.

This type of filing protects lenders from the event that a specific asset is damaged, destroyed, or otherwise loses value. However, a blanket lien offers little protection for borrowers, as the creditor is granted access to all of their assets and could potentially put them out of business.

How to file a UCC financing statement

Filing a UCC financing statement must include the following information:

• Personal information of the borrower: the filing must establish whether the debtor is an organization or an individual. In the case of registered organizations, the name of the debtor must match the organization's name in the public record. In the case of an individual, their name in the filing should match their name on an unexpired driver's license in their state of residence. Some states, e.g. Delaware, offer a "safe harbor" option, which makes multiple names for an individual acceptable, such as a name under which they own property.
• Personal information of the lender or the lender's representative: multiple names can be listed if there is more than one lender.
• Description of the collateral: the description must reasonably identify the collateral. In the case of a blanket lien, an indication that the UCC financing statement covers all of the debtor's assets.

Where to file

Once all the necessary information has been prepared, it is easy enough to file the UCC financing statement with the appropriate secretary of state's office. This does not necessarily occur where the collateral is located, like in the past, but in the state in which either the borrowing organization is registered, or in which the individual borrower resides.

When to file

It is important to keep in mind that the order of filing has an impact on the outcome. A borrower can secure loans from more than one lender, and each lender has the right to file a UCC financing statement. The lender that was the first to file an accurate UCC-1 financing statement (to "perfect" their interest) is also the first to collect on the lien. Once they are satisfied, the lender that was second to file takes their turn to collect, and so on.

How to search for a UCC financing statement

Once a UCC financing statement has been filed, it becomes public record. It can be found using the secretary of state's website, for the state in which the UCC-1 filing was filed. Commercial UCC search engines can be used to simplify the process.

The name of the debtor used for the search must be exact, as results can be affected by small differences:

• & vs "and",
• a singular form vs a plural form of a name,
• typos or extra spaces,
• numerals (1 instead of "one").

UCC financing statement FAQ

Q: can the debtor's personal property be the collateral indicated in a ucc-1 filing.

A: Yes, in most cases. However, the debtor must be identified correctly and the description of the collateral must be detailed enough for a reasonable person to identify it.

Q: Does a UCC-1 filing create an ownership interest in the collateral?

A: No, it does not create ownership or any other type of legal rights over an asset. It only creates a lien on the asset, giving the lender a security interest in it.

Q: How long does a UCC-1 filing remain active?

A: A UCC-1 financing statement is valid for five years from the date of filing. It can be renewed before expiration for another five-year period.

Q: Does a UCC-1 filing need to be registered in all states where the debtor has assets?

A: No, only the state in which either the borrowing organization is registered, or in which the individual borrower resides needs to be considered.

Q: Is a UCC filing required for all types of loans?

A: No. Some loan agreements do not involve collateral and thus do not require a UCC-1 filing.

Using AI tools to ensure a correct filing

Filing a UCC financing statement correctly is essential to protect creditors' interests and ensure that the filing stands up in court. However, it is easy to make mistakes when filling out such paperwork. Luckily, AI-based tools can help lenders avoid errors and omissions when filing UCC statements. These tools use natural language processing (NLP) to extract relevant information from documents and can fill in the form automatically, eliminating the risk of human error to ensure a bulletproof filing.

Enforcing security interest with the help of a UCC-1 filing

Filing a Uniform Commercial Code financing statement is an important step in protecting one's rights to collateral and is often a critical element of business transactions. By understanding what a UCC financing statement is and how to file one, lenders can ensure that they will be able to collect their secured interest in the case of a loan default or the debtor's bankruptcy. AnyLawyer's suite of legal-tech tools makes the process of filing a UCC financing statement much easier, faster, and more secure. With the help of AnyLawyer, lenders can be certain that their UCC financing statements will be well-crafted and properly filed.

Recent articles

Legal tech & ai insights.

Interviews, tips, guides, industry best practices, and news.

Automated contract abstraction - the legal worker's helper

Legal professionals are often bogged down with mundane, time-consuming tasks...

Contract review software and automation - the 2023 guide

Contract review is a key part of the legal process, but it can be...

15 contract risk management best practices that should not be skipped

For any business, mitigating risk is the key to success. Unanticipated losses...

UCC-3 Financing Statement | Practical Law

UCC-3 Financing Statement

Practical law glossary item 1-382-3886  (approx. 2 pages).

UCC Financing Statement

Primary tabs.

UCC Financing Statement (usually called a UCC-1 Form ) is a form that creditors file with states in which they have a security interest in a debtor’s personal property. The financial statement serves a similar purpose as recording a deed for real property : registering debt with a state so other creditors and the government can track legitimate security interests in property. Creditors negotiate with debtors to have senior security interests, and with limited exceptions, creditors that file a UCC-1 Form and related documents will rank above other creditors in accessing assets should the debtor become insolvent . However, if they do not file a financial statement, another creditor may negotiate and register a security interest on the same property. In which case, the new creditor likely will rank above the old creditor because there was no warning to the new creditor about the pre-existing security interest. Most states require the same form with limited variations and typically require basic information about the debt including the parties, amounts, contact information, and sometimes extra documentation. New York uses an old UCC-1 Form that has quite a few differences from all other states, however, such as requiring more information on the form and information in an addendum. 

Under Article 9 of the UCC , the steps of a secured transaction are 1) getting collateral, 2) attachment, and 3) perfection and priority. Filing UCC Financing Statement is one requirement of the perfection step. Perfection determines which party has priority in the collateral, and gives notice to the public who has secured interests in the collateral and who claims first. However, if a security interest wasn’t attached first, it cannot be perfected. Since the attachment clarifies that the debtor has rights to the collateral, the creditor has extended value to the debtor, and they have a security agreement or authenticated record defining the collateral, without it the creditor’s rights in the debtor’s collateral cannot be enforceable against the debtor and third parties. Once attached, the creditor should choose the following ways to perfect their secured interest.

Perfection:

Perfection can be obtained through the UCC Financing Statement, purchase money security interests (PMSI), and through possession/control.

UCC Financing Statement: 

• Debtor and secured party’s name,
• Collateral describing, and
• A creditor or other person authorized by the debtor in their security agreement files it.

If there are some errors or omissions that do not comply with the above requirements, the financing statement may still be effective unless such mistakes make the statement substantially deviating and seriously misleading. For example, a financing statement that did not provide the name of the debtor was presumed to be misleading unless the debtor’s correct name was available in the Secretary of State’s office. 

Purchase money security interests (PMSI) 

• Thus, filing a financing statement is not required for PMSI of consumer goods, for it is automatically perfected.
• For non-consumer goods of PMSI, the creditor still needs to fill out the financing statement. If they file it “before or within 20 days after the debtor receives delivery of the collateral, then the security interest takes priority over conflicting interests which arise between the time the security interest attaches and the time of filing.”

Possession or control: 

• Perfection can also be obtained by possessing or controlling the collateral. 

[Last updated in June of 2022 by the Wex Definitions Team ]

• business law
• commercial law
• wex definitions

What Is a UCC Financing Statement?

Written by: Alison Wilkinson Legally Reviewed by: David Curle and Jennifer Tsai

March 23, 2021

6 minute read

The Uniform Commercial Code , or UCC, is a set of model rules that govern commercial transactions in the United States. Every state has adopted these model rules in substantially similar form, meaning that the terms of a commercial contract entered into in Connecticut is enforced in the same way as the terms of a commercial contract in Texas or any other state. The uniformity of application gives certainty to business relationships.

A UCC financing statement — also called a UCC-1 financing statement or a UCC-1 filing — is a legal form that allows a lender to announce a lien on an asset to secure a loan . By filing the UCC financing statement, the lender is giving notice that it has an interest in the property listed in the filing. This means that if the debtor defaults on the loan, the creditor can potentially receive the personal property of the debtor that was put up as collateral.

The filing of a UCC financial statement creates a hierarchy of which assets can be seized, and in what order, should the debtor default or declare bankruptcy. For instance, if a borrower takes out another loan from a second lender using the same assets as collateral, the second lender will not be permitted to recover the assets until the first lender is fully satisfied. Accordingly, UCC-1 filings are generally filed as soon as the loan is made.

Types of UCC-1 Filings

There are two types of liens that can arise under a UCC financing statement: liens against specific collateral and blanket liens.

UCC Liens Against Specific Collateral

A UCC lien against specific collateral gives creditors an interest in a specific asset or in specific assets of the borrower. A lender will generally seek specific collateral when loaning money for a specific asset; for instance, if the loan is for money to purchase a backhoe, the backhoe itself could be the specific collateral for the loan. Thus, the types of specific collateral are usually moveable, including items such as vehicles, office equipment, or inventory. However, the collateral can also include items such as receivables, investment securities, letters of credit, and other items of value.

UCC Blanket Liens

Rather than giving an entitlement to specific assets, a blanket lien gives lenders an interest in all of the borrower’s business assets. If the borrower defaults, the lender can seize the business assets up to the value of the debt, then sell the assets to repay the debt. Assets can include tangible items like real estate and equipment, as well as intangible items like intellectual property.

This type of lien is favored by lenders. With specific collateral, if the item is destroyed or has lost value, it may not cover the loan. However, with a blanket lien, the lender can recover multiple items up to the value of the loan, giving the lender protection that a specific lien cannot.

On the flip side, a blanket lien provides minimum protection to borrowers, who could potentially lose all of their pledged assets in the event of default. In effect, this could mean that the borrower would be put out of business if the loan is defaulted.

How to File a UCC Financing Statement

When to file.

The order in which UCC financing statements are filed dictates the order in which lenders can collect. The first lender to file is able to repossess the collateral listed up to the value of the loan. Only after, or if, that lender is satisfied can the second lender to file collect. For that reason, lenders are apt to file quickly so they can be first in line. This also means a second lender may be hesitant to issue a loan to a borrower. Accordingly, it is of utmost importance that lenders correctly file the UCC financing statement in a timely fashion.

Information Included in a UCC-1 Filing

The following information must be included in the UCC-1 filing in order to perfect the lien:

Personal and contact information for the borrower

The filing should indicate whether the debtor is an individual or an organization , along with basic information about the debtor organization if applicable. If the borrower is a registered organization, the name of the borrower must exactly match the name of that organization in the public record — for instance, in the company’s articles of incorporation filed with the Secretary of State.

For an individual, generally the name listed should match the name on that individual’s driver’s license, but only if the individual has an unexpired driver’s license in the state of principal residence. This is appropriately known as the “ only if ” requirement: Only if the name exactly matches the one on the driver’s license can the lien be perfected.

In some states, however, such as Delaware, there is a “ safe harbor ” option. Under the safe harbor option, multiple names for an individual may be accepted, including a name that differs from the one listed on the driver’s license. For instance, if the debtor’s driver’s license identifies the individual as Jonathan Sullivan III, but the person owns property under the name Jon Sullivan, the name Jon Sullivan may also be accepted.

Personal and contact information for the lender or the lender’s representative

In the event of multiple lenders, multiple lender names can be listed.

Description of the collateral covered in the UCC lien

UCC financing statements must include a reasonably identifiable description of the collateral or an indication that the financing statements cover all assets or personal property. A supergeneric description — such as “all of the debtor’s personal property” — is generally not sufficient to reasonably identify the collateral.

Failure to include all of this information about the borrower, lender, and collateral could result in the state rejecting the filing. If the debtor enters into loans with multiple lenders at or near the same time, and a lender’s UCC-1 filing is rejected, this can have drastic effects on that lender’s ability to collect the loan in the event of default. The first lender to “perfect” its interest in the property, which means it has its UCC filing filed and accepted, will have priority in collecting on the loan, regardless of whether it was the first lender approached by the borrower.

Where to File the UCC-1 Filing

In the past, UCC filings could be made where the collateral was located. However, recent changes to the UCC provide that the location of the collateral no longer determines where to file.

Instead, filings are generally made with the secretary of state’s office in the state where either:

• The debtor organization is registered
• The individual debtor resides

Uncovering All Relevant Records

Once the UCC filing is perfected, it becomes public record. Accordingly, people can search the relevant databases to uncover whether there is a UCC lien against any given debtor. They can also search the secretary of state’s website in the state where the debtor resides or is incorporated for the exact name of the debtor. Commercial UCC search engines have similar search functions.

It is important to stress that during a search, the name of the debtor must be exact. In the case of an organization, the name can be confirmed by looking up the organization’s articles of incorporation on the secretary of state’s website. For an individual, it is best practice to try several variations of the name to ensure that the search delivers all relevant results, especially in a safe harbor jurisdiction.

A full understanding of the rules around filing UCC financing statements, and of the ramifications if the statements are filed incorrectly, is a key component to securing and collecting on commercial loans. Kira’s technology includes smart fields that are optimized for use on UCC financing statements, which allows users to uncover relevant information from their UCC financing searches.

This site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Learn more about what we do with these cookies in our privacy policy .

First Corporate Solutions

"FCS online system really helped us manage our transactions and cut costs. I get what I need at my fingertips, accurately and easily. And when I need to contact someone there’s always an actual person who responds."

Natalie M., Credit Manager, National Bank, Chicago, IL

"FCS educational resources are simply the best in the industry. I have downloaded numerous articles from their resources library and I keep on coming back for more."

Margie S., Paralegal, Fortune 500 Law Firm, Los Angeles, CA

Our mission is to blend technology and personalized customer service to deliver the most responsive, efficient and accurate risk mitigation solutions.

Risk Management Blog

Ucc & corporate due diligence resource guide for legal and financial professionals, 5 types of ucc3 change statements.

It’s an amendment filing to an original UCC1 financing statement that changes or adds information to the originally filed UCC1. It’s a filing tool secured parties use to manage their UCC portfolio to maintain their perfected security interests.

Importantly, • the timing of UCC3 recording execution • the accuracy of the data changes or additions • and choosing the correct amendment type can all be critical to maintaining a perfected security interest and the original UCC1 priority position.

Before discussing what a UCC3 is, its various types and how they are utilized, a quick review of UCC1s is in order. UCC1 financing statements are recorded filings which give notice to other creditors of a security interest in specific collateral used to secure debt. They are typically recorded to perfect the security interests of a secured party to prioritize their claim position in the event of a debtor default. UCC1s are subject to the effects of subsequently filed documents, whether those documents attach to the original filing, like a UCC3, or not, like a Federal tax lien.

Some of these subsequently filed documents can prime a perfected security interest, like Federal tax liens.

Others, like UCC3s if not executed according to statute, can cause a secured party to lose effectiveness of their lien, their UCC1, and all claims on any collateral should there be a default.

It’s that last piece that is vitally important about UCC3s: they can affect previously perfected security interests depending on when and where they are recorded, what they do, and how accurate the new data is.

What are the Different Types of UCC3s?

There are five different types of UCC3s.

• Continuations – extends the financing statement effectiveness for another five years;
• Party Amendments – adds or amends debtor or secured party information, such as changes to the legal name or the address
• Collateral Amendments – adds or removes collateral from the collateral description, or restates the collateral description completely
• Assignments – transfers “full” or “partial” rights in the filing from one secured party to another
• Terminations – extinguishes a financing statement prior to its five-year lapse date

Where and how are UCC3s recorded?

UCC3s are recorded in the same jurisdiction as the effective UCC1 it amends. A step by step process on how to execute a UCC3 filing can be found here .

What are some examples of the critical nature of each UCC3 type?

• Continuations – there is a 6 month window prior to the UCC1 5-year lapse date in which a Continuation must be recorded for it to be effective; Continuations are not effective if recorded after the lapse date and the UCC1 lapses and becomes ineffective
• Party Amendments – these amendments often coincide with name changes and/or address changes to business entity documents of the parties involved; these name changes and address changes typically require amendments to the original UCC1 identifying these changes within a specific time frame; address changes that involve a change of state have specific UCC3 filing protocols for secured parties to follow within specific time frames
• Collateral Amendments – partial releases are executed as a DELETE collateral descriptions, a critical aspect of this type of UCC3; a collateral restatement  is a replacement of a prior collateral description, not an addition to that prior description, so a secured party’s security interest in any collateral that is not fully restated in the UCC3 collateral amendment risks becoming unperfected
• Assignments – sometimes a new UCC1 is required instead of an assignment, depending, and failure to recognize what is required in a situation can result in a secured party’s lien becoming ineffective
• Terminations – other parties can terminate a UCC1 besides the secured party; also, RA9 requires no signatures to record terminations; a termination can be recorded by the debtor under certain circumstances; monitoring services are available which alert secured parties to when another party files a termination on one of their UCCs; contact the secured party to verify the effectiveness of a recorded termination.

Once a UCC1 is recorded and a security interest is perfected, a secured party’s focus shifts to maintaining that perfected security interest and managing the UCC1 going forward until it either lapses or is terminated.

UCC3s are a tool which secured parties use to manage that process.

Another important conversation about UCC3s are common mistakes that are made regarding them. Use the button below to download our Free Reference Guide: Top 3 Mistakes on UCC3 Change Statement .

8 thoughts on “ 5 Types of UCC3 Change Statements ”

• Pingback: UCC3 vs UCC1 Financing Statement: What’s the Difference?
• Pingback: 6 Common Risk Management Solutions in 2022 - Blogger, Interrupted
• Pingback: How To Get a Personal Loan Without Collateral - Daayri
• Pingback: UCC 3 Filing: How Does It Work?
• Pingback: A Quick Guide to Understanding UCC1 Statements - Courtney Cole Writes
• Pingback: How to Improve Your Risk Management Process - Florida Independent
• Pingback: Understanding the Security Interest Uses and Benefits - Incredible Magazines
• Pingback: ▷ ¿Qué son las presentaciones UCC? Todo lo que vale la pena saber

Leave a Reply Cancel reply

You must be logged in to post a comment.

UCC3 Amendments: The Essentials

Make an inquiry.

All fields marked with * are required.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

It can be difficult to understand the nuance of both filing and searching Uniform Commercial Code (UCC) financing statements (also known as UCC3s). Sometimes, filers could find the effect of their filed UCC3 to be different than intended. Other times, there are multiple amendment actions that can be taken to achieve the same effect on the UCC3 record.

The result is that this process can become cumbersome for both filers and those who interpret the record. CSC Associate General Counsel Paul Hodnefield will seek to clear up the uncertainty surrounding the different types of amendments, their effect on the record, and the risks involved in the process.

Webinar transcript

Disclaimer: Please be advised that this recorded webinar has been edited from its original format, which may have included a product demo. To set up a live demo or to request more information, please complete the form to the right. Or if you are currently not on CSC Global, there is a link to the website in the description of this video. Thank you.

Tarik: Hello, everyone, and welcome to today's webinar, "UCC3 Amendments: The Essentials." My name is Tarik Hopkins, and I will be your moderator.

Paul: Thank you, Tarik. Well, before I get into the presentation, I just want to introduce myself a little bit. As Tarik said, my name is Paul Hodnefield. I'm Associate General Counsel for CSC, and in that capacity, it's my responsibility to be the go-to person for all things related to the UCC search and filing process.

And to carry that out, I'm heavily involved in the industry. I participate with the filing officers and their organization, IACA. I co-chair a task force for filing office operations and search logic for the ABA. I am frequently in contact with filing offices around the country, troubleshooting various issues, and a lot of other . . . oh, I also monitor case law and legislation on a daily basis.

So needless to say, I get a lot of information from a lot of different sources, and one of the favorite parts of my job is when I can share that with our customers. So I'm really glad to be here today.

And the topic we have today happens to be UCC3 Amendments. Understanding UCC3 Amendments can be a challenge for both filers and searchers. These records don't always have the effect that their title implies, and in some cases, there are multiple options for accomplishing the same effect on the record.

Yeah, it is critical for those involved in the process to know how UCC3 records work. I mean, filing a UCC3 Amendment incorrectly or misinterpreting an amendment when it appears on a search can have costly consequences for the parties involved.

What I plan to do today is provide a high-level overview of the essentials regarding the different types of UCC3 Amendments. In the process, I will point out some of the best practices and identify common traps for the unwary searcher and filer.

More specifically, I'm going to begin with some basic concepts about the UCC system and UCC3 records, including the rules for sufficiency and design of the UCC3 form. Then I'll move on to the specific types of amendments.

The program will finish with some specific case issues, and then I'll take questions for the remaining time.

A couple of caveats about this program. As noted, this is a high-level overview. There are a lot of details and nuances for some types of amendments that require much more time to cover than we have available today.

And likewise, post-filing changes that require amendments are outside the scope of the program today. These topics all require their own sessions and much more time to cover thoroughly, but we do offer other programs as well from time to time.

So with no further ado, we'll go ahead and get into the basics of the UCC3 process.

A couple of general concepts that are important to understand. Actually, a few of them. For one, it's really important to understand that the UCC is a notice filing system. And what that means is that what gets filed in the UCC records are not liens or security interests. They're merely notices that indicate a security interest may exist.

These records are not enforceable in their own right. You can't sue to enforce a Financing Statement. That's not what they're for. You can sue to enforce the underlying documents, but all a UCC Financing Statement does is provide notice so the security interest may exist.

That same notice filing principle applies to amendments as well as to Financing Statements. So all amendments are really nothing more than notices either.

Another important concept to understand is that a UCC3 amendment has no separate existence apart from the Financing Statement technically in the definitions of Article 9. A Financing Statement as defined in Article 9 means a record composed of an initial Financing Statement and any filed records related to the initial Financing Statement. In other words, UCC3 Amendments are subsumed into the Financing Statement to which they relate.

Another very important thing to understand about UCC3 records, especially in a notice filing context, is that the effect of a UCC3 Amendment cannot be determined by the record itself. Again, these are just notices. They don't provide all the details somebody would need to know the effectiveness, and that means that further inquiry is necessary to understand the full state of affairs with regard to the amendment.

Another important concept to understand when it comes to UCC3s is the role of the filing office. The filing office plays less of a role than many people realize in the filing of amendments.

The filing office role is purely ministerial. The Article 9 drafting policy is to make the filing office's role ministerial. That means they don't exercise judgment or discretion when it comes to filing or search.

The filing office does not interpret UCC records. They do not determine the effect or meaning. In fact, the filing office has no power to make a record effective or ineffective. All it can do is make it retrievable or hidden. And what this does is it places the responsibility on interested parties, those who search the records, to determine what they mean and what the effect is.

The filing office has, as a matter of policy under Article 9, an open-door policy. And what that means is when a search is conducted, the filing office simply turns over everything that's been filed that's related to a Financing Statement disclosed by the search. They have to maintain all the records related to a search until a year after the lapse date, so they can't get rid of anything until that period of time.

So the search results include any disclosed initial Financing Statement and all related records. And what this really means for the searcher is that all UCC Amendments are cumulative, meaning nothing is ever removed from the record. They always add to it. Even an amendment to delete a party doesn't actually delete the party. It just adds a record that the searcher can take a look at to interpret who is a party, but the parties will continue to appear in the index.

Now, not all amendments that get filed are effective. They have to satisfy certain requirements under Article 9, so I want to talk about the effectiveness of UCC Amendments.

First of all, an amendment of any type is only effective to the extent it was filed by a person that may file it under Section 9-509. In other words, it's got to be authorized. It has to be filed with the authority of a person who is authorized to do so under 9-509.

Now, under 9-509, the people entitled to authorize a record will depend on the nature of the record. Any record that expands the scope of the Financing Statement, such as adding collateral or adding a debtor, that must be authorized by the debtor. Now, that authority isn't required to be indicated on the UCC3, but it does have to be authorized.

Now, authorization always takes place outside the public record. I can't be proven from the record itself.

Any other amendments, such as to change party information, change a party address, continue, terminate, assign, all of these things must be authorized by the secured party of record.

Now, one thing to bear in mind, too, is that there may be limited effect to a UCC3 Amendment because under 9-510 (b), an amendment authorized by one secured party of record does not affect the Financing Statement with respect to another secured party of record, unless that other secured party of record has also authorized the filing.

Now, as I mentioned, authority to file cannot be determined from the record itself. It isn't required to be indicated in the record. And in fact, it can't be proven by the record. That can only be determined through conducting further inquiry outside the public record to reach that point.

In addition to being filed by somebody who has authority to file it under 9-509, in order to be effective, an amendment has to also be sufficient. In other words, it has to comply with the statutory requirements of Article 9.

These are fairly straightforward. For one, it has to identify by file number, the initial Financing Statement to which it relates, at least if it's filed in the State Central Index. So it has to have a correct initial Financing Statement file number.

If it is a fixture filing or other record that's filed in the real estate records, then the filer must provide additional information required by section 9-502 (b), which typically is what's required to get it filed in the land records, like it has to indicate it's to be filed and the land records, has to contain a description of the real property, and so forth.

So these are all things that are required to index the record in the appropriate index. In addition to that, the record has to indicate what type of amendment it is because the filing office has to know how to index it appropriately. So this is done by using the appropriate checkbox on the form.

Finally, the record must provide any additional information that's required based on the type of amendment. For example, an amendment to add a debtor must have a debtor name and address. That information is provided in Sections 6 through 8 of the UCC3 form or its electronic equivalent.

Now, there are multiple types of amendments that can be done using the UCC3 record. There are either 12 or 13, depending on how you count them. I tend to think there are 12, because I don't draw a distinction between full or partial assignment. That's not really a filing office issue. That's just to provide additional information for those who search the records.

You can add, delete, or change parties and collateral. There are assignments, continuations, and terminations. A total of 12, maybe 13 if you count full and partial assignments separately.

Now, these are all done using the UCC3 form, or its electronic equivalent. A couple of things about the UCC3 form.

Before I do that, though, I want to point out one of the reasons that understanding the UCC3 form is important is because that while paper is becoming less and less common . . . In fact, in many states now, they no longer accept paper forms. But the layout of this form serves as a template for the design of the electronic filing systems used by the states. So it is important to understand what this record really means and how it's designed.

First of all, it's intended to be a multi-purpose form. It's used for all different types of amendments. And because of that, certain fields are used for different purposes. For example, Field 7 might be used to provide new information for a new debtor, but it might also be used for providing assignee information, things like that.

The collateral field might be used to add collateral, but it also might be used to indicate a partial assignment.

The form was not designed with the intent of carrying out multiple actions. And in fact, there are certain combinations of actions that do conflict with each other because they would use the same fields for different purposes.

So the design really assumes one amendment per form, and even in states that do accept multiple actions on the same form, there oftentimes isn't an advantage to that because there isn't necessarily a cost savings because they'll charge multiple fees, and there's a greater risk of indexing errors. So it's generally recommended to do only one action per form. Most state electronic filing systems only allow one action per UCC3 record.

Now, the form and the electronic equivalent were designed intentionally to limit the types of actions that can be done only to those actions that are either required or permitted under Article 9. That's why the standard forms do not have a miscellaneous amendment action or provide for subordinations or other types of things that people might want to file in the UCC records.

The idea was that the filing offices did not want to turn the UCC index into a bulletin board for anything that could be filed. They wanted to keep it narrowed down to just the required documents or the required actions that need to be filed under Article 9.

So enough about the form and other general concepts. Now, I want to move on and talk about some of the specific types of amendments. And I want to begin with one that probably has caused the most confusion out there for both filers and searchers trying to figure out exactly what it means and when it's used, and that is the UCC3 Assignment.

Now, the purpose of the UCC3 Assignment is to assign some or all of the secured parties' right to amend the Financing Statement. It does not assign the security interest. That is something entirely separate.

In fact, a UCC3 Assignment doesn't even really assign the secured party's right to amend the Financing Statement. What it does is it grants another secured party the right to amend the Financing Statement, because it doesn't remove the assignor as a secured party.

In fact, the effect of a UCC3 Assignment is that the assignee becomes a secured party of record, and the assignor remains a secured party of record. They still have authority to amend the Financing Statement.

There's some dispute on this. Some commentators have said, "No, once an assignment is filed, the assignor has no more interest in the record." But I think that's a risky view to take of it, because the black letter of the statute does draw a distinction between a UCC3 Assignment and the effect it has on the parties that are secured parties of record.

So the safest course of action is to assume that the assignor remains a secured party of record until an amendment is filed to delete the party.

So really, a UCC3 Assignment has the same effect on the record as an amendment to add a secured party. This is one of those cases where you can accomplish the same thing through different amendments. An assignment adds a secured party. An amendment to add a secured party adds a secured party. They pretty much do the same thing when it comes to the filing office index.

As far as a partial assignment goes, the purpose of this is to limit, actually, the assignee's right to amend the Financing Statement to affect only certain described collateral.

The status of the parties following a partial assignment is the same as for a full assignment. The assignee becomes a secured party of record. The assignor remains a secured party of record.

In fact, there's a case out there, which I might talk about if there's enough time, involving an assignment where the Court pointed out that because the secured party did not assign the security interests, the assignor remained perfected by the Financing Statement it originally filed.

So to indicate a partial assignment, very simple, you just check Box 3 for an assignment. And then in the Collateral field of the Amendment Form, Box 8, there is a checkbox for collateral assigned. That is not a collateral amendment. It is actually part of the assignment, even though it's in the collateral box.

Remember, the form is designed from multiple different types of actions, some of which are not compatible with each other. So a partial assignment is not compatible with a change to the collateral.

So the effect of a partial assignment is simply that it limits the effect of any amendments filed by the assignee to the particular collateral that's described in the assignment.

So if you have an assignee, and the partial assignment says Accounts Receivable, and later that assignee files a termination, that termination would only be effective with regard to the Accounts Receivable. That's the way it's designed to work.

I should point out as an aside, as I go through the different amendment actions, that some of these issues have not come up before the courts yet. And as a result, we don't know how the courts will interpret them. We can only speculate based upon the black letter of the law in the official comments to Article 9, but that's the way it should work.

So UCC3 Assignments, some practical considerations. From a searching perspective, remember that the effect of an assignment requires further inquiry beyond the public record. There's nothing in Article 9 that requires a filer to indicate that an assignment is full or partial. There are a couple of states that have required that, but Article 9 does not.

And Article 9 doesn't require a partial assignment to specify collateral. That's something that a searcher could learn through further inquiry of the parties involved.

Also important from a searching perspective to remember is that the assignor remains a secured party of record, or at least when it comes to the . . . As I said, this is something that's still being debated. The courts haven't really addressed it yet, but there is some case law out there that suggests this is how the courts will assume it.

But to be safe from a searching perspective, it's best to assume that the assignor remains a secured party of record, unless an amendment has been filed to delete that party or they have filed a termination statement.

And amongst other things, the assignor has authority to amend that Financing Statement, even if it appears to be a full assignment. So take that into consideration.

And there's a good reason for that, too, because, theoretically, a Financing Statement filed only by the assignee could remain effective for the assignor secured party. Even if the assignor doesn't have an interest in it at the time, they could issue a new loan and use that Financing Statement to obtain original priority. There's a strong argument that that could be done.

The case hasn't arisen before the court yet, but it could at some point, and nobody wants to be a test case on it. So it's always better to assume that the assignor remains a secured party of record.

So some best practices. From a filing perspective, if, after filing an assignment, the parties do not want the assignor to remain a secured party of record, they should be filing a separate UCC3 Amendment to delete the original secured party so that they don't remain a secured party of record.

From a searching perspective, the assignor should be treated as a secured party of record unless an amendment has been filed to delete that party. That means they should receive all notices to which a secured party is entitled to under Article 9 and be treated as a secured party in any action to enforce a foreclosure or anything like that, until they disclaim an interest anyway.

If a Financing Statement that includes a UCC3 Assignment has been terminated, it's going to be necessary to verify that the assignor actually authorized the termination, in addition to the assignee, in order to ensure that UCC3 is actually fully terminated and cannot come back to haunt a later secured party.

Remember that the authority to file and who provided that authority and the extent of that authority is not something that you can determine from the UCC3 record itself.

On to the Termination Statement. The Termination Statement is used to indicate that the Financing Statement to which it relates is no longer effective. This is just like any other UCC record.

Assuming that it was filed by a party that was authorized to file it under 9-509, then upon the filing of that Termination Statement, the Financing Statement to which it relates ceases to be effective.

Now, the filing office, however, will keep it active in the index. Termination doesn't trigger any filing office duties. All they have to do is index it as an Amendment so it shows up on a search.

Part of the issue is the filing officers do not know whether a Termination Statement was authorized and, therefore, effective. So they just file it, and they continue to maintain that Financing Statement until it lapses by time. And that means that they will continue to file Amendments after that termination has been filed. It's up to the searcher to determine what the effect of any Termination Statement is.

So, assuming it was filed with full authority, the practical effect is that the Termination Statement terminates the effectiveness of a Financing Statement, and it does so as a whole. The entire Financing Statement ceases to be effective, and that's the case for all debtors and all collateral, except for a rare case where a partial assignee might be filing a Termination Statement.

So really, there's no such thing as a partial termination. It's kind of all or nothing. It goes to all of the secured party's interest in that Financing Statement. And that creates some traps for the unwary here because a UCC3 Termination Statement may not terminate the record. If it wasn't authorized by the secured party of record, it's not effective. Simple as that.

The filing office will file it because they play no role in determining effectiveness. Their job is to file the records so that it's there and that when somebody conducts a search, it's there for them to examine.

Also, even if a secured party authorized the filing of a Termination Statement, the Financing Statement may still remain effective if there are multiple secured parties, and that's because the Termination Statement filed by one secured party of record has no effect with respect to the interests of the other secured parties of record.

So you may have Secured Party A and Secured Party B on a Financing Statement. Secured Party A authorizes the filing of a Termination Statement. Secured Party B does not. The Termination Statement will terminate Secured Party A's interest, but not Secured Party B's. So the Financing Statement will remain effective after that.

And this creates a potential trap for the searcher that sees Financing Statement, Termination, and assumes that that Financing Statement is no longer effective. You can't do that just from the records that have been filed. Further research is required.

So, if an unauthorized Termination Statement is filed, or one that has not been authorized by all secured parties of record, guess what? The Financing Statement remains fully effective against all the debtors and all the collateral, and that is a trap for the unwary searcher who relies solely on the public record.

And there is case law out there on that where the courts have found that a searcher who relied on an unauthorized Termination Statement, they lose. The secured party that filed the Financing Statement prevailed.

When it comes to authority to file a Termination Statement, you can't determine that from the record itself. Further investigation is always required.

I do want to point out, too, that there is one situation in which a debtor may authorize the filing of a Termination Statement. That is where the secured party, there's no obligation remaining, and the debtor has sent a demand to the secured party to terminate the Financing Statement.

If the secured party does not do so when there is no obligation remaining secured by the collateral, then if the secured party doesn't do so within 20 days, the debtor becomes authorized to file an effective Termination Statement. That is rare and requires compliance with the strict statutory requirements.

So some best practices when it comes to Termination Statements from a filing perspective. If it is intended to terminate with respect to multiple secured parties of record, make sure all secured parties of record authorize the filing of the Termination Statement if that's what is intended.

If there are multiple debtors, and the secured party only wants to terminate with respect to one, do not file a Termination Statement. Use an Amendment to delete the debtor. That will cut that debtor out of the scope of the Financing Statement.

Same thing with terminating with respect to some of the collateral. The proper thing to use at that point is an Amendment to Delete Collateral, not a termination. I mean, you can write debtor names onto a Termination Statement to try and limit it, but that doesn't do it. It doesn't limit it to particular debtors. It will affect the Financing Statement as a whole.

From a searching perspective, remember that the Termination Statement is only a notice, just like a Financing Statement, and that it's necessary to conduct further inquiry to determine the authority of the party or parties that filed the Termination Statement. You just can't determine it from the face of the public record itself.

Reliance on the Termination Statements without any further inquiry is going to be a risky proposition. And searchers who relied on that and later took their own security interests have found themselves in some cases subordinated to that prior secured party who did not authorize the filing of a Termination Statement.

And Termination Statements can be filed for all sorts of reasons without authority. Sometimes it's by mistake. Somebody transposes numbers on a Financing Statement file number. Sometimes, a new lender may assume they're authorized to file a Termination Statement, because there's no outstanding balance with the prior lender, or something like that. There are all sorts of reasons why they can be filed by mistake. And if it's not authorized, it's simply not going to be effective.

Next, I want to talk about the Continuation Statement. The purpose of the Continuation Statement is twofold. It does two different things. First of all, it extends the effectiveness of the Financing Statement to which it relates for an additional five-year period. And then the second part of it is it will keep the record active in the filing office records, so it will show up on searches for an additional five-year period.

Now, I want to be clear on something. Filing a Continuation Statement doesn't automatically perform both of these purposes. It is possible to file a Continuation Statement, for example, that will not extend the effectiveness, because it wasn't authorized or there was some other problem with the record. It gets filed and the filing office extends the lapse date by another five years. But if the record isn't effective, it's not going to extend the effectiveness of the record for an additional five years.

Likewise, there are times where a Continuation Statement might not get filed, such as a wrongful rejection case, and the lapse date won't be extended, but the effectiveness remains or it becomes a hidden lien due to the filing office actions.

So the purposes are independent. And it has to be authorized and sufficient. It has to meet all the requirements for filing a Continuation Statement in order to accomplish both purposes.

I also want to mention that the extension of a lapse date, calculating the extension of effectiveness and the new lapse date, runs five years from the date the record would have ceased to be effective, absent the filing of the Continuation Statement.

This isn't much of an issue at the state level, but at the county level, it is very common for counties who don't deal with UCC all the time to make a mistake when they get a Continuation Statement and extend the effectiveness for five years from the date the Continuation was filed.

When that happens, they can usually be talked into resetting the lapse date correctly, but it can cause problems five years down the road if another Continuation is required, because you've wound up with a shortened window in which to file, or at least the filing office believes that to be the case. So be aware of that potentially at the county level especially.

So, when a fully effective Continuation Statement is filed in compliance with the statute, the Financing Statement to which it relates will remain searchable for another five-year period, and it will remain effective for that additional five-year period.

Some things to be aware of when it comes to a Continuation Statement. One of the most important is that the Continuation Statement can only be filed within six months before the lapse date. The intent here is to make Article 9 of the filing system a self-purging system. If a Continuation Statement isn't filed before the lapse date, then the record can be purged a year later.

And this is a way of making secured parties go back and double-check and make sure they really want to file a Continuation Statement, or that one is needed at that point. So it has to be filed within that six-month period before the lapse date.

Now, if the record is filed late any time after the lapse date, even if the filing office accepts, indexes the record, and extends the lapse date, still, it's too bad because by operation of law, the Financing Statement will cease to be effective. It will continue to show up in the searchable index, but it has lapsed by time as a matter of law.

So, if the Continuation is filed late, the Financing Statement lapses, and the secured party had better file a new Financing Statement if they want to remain perfected. They're going to lose their priority, of course.

But remember, the filing office has no power to make a record effective or ineffective if they accept it and reset the lapse date. After it's been filed late, it's an ineffective record.

And this has happened. There have been states that have done this. And the secured parties might think that they're perfected, that they have an effective Continuation Statement out there, but they don't.

Fortunately, it hasn't been something that's come up before the courts yet. But when it does, I think there's going to be a rude awakening if the filing office made that type of error, which they have in the past.

If the UCC Continuation Statement is filed earlier than the six-month window, it's not effective. And again, that's the case even if the filing office accepts the Continuation and resets the lapse date.

So it's the filer's compliance with Article 9 that determines whether the record is effective or ineffective, not anything the filing office does.

So best practices with Continuation Statements. You've got to get them filed within that six-month window. Don't file them any earlier than six months before the lapse date, and certainly don't file them after the lapse date.

Now, I want to move on and talk about Party Amendments. First, we'll talk about an Amendment to Add a Party, either the debtor or the secured party.

The purpose of this amendment is to add another party to the Financing Statement. In the case of an added debtor, it will perfect a security interest in the assets of the debtor that's being added. And the priority date for that will run only from the date when the amendment is filed. It is not retroactive to the original UCC-1 filing date.

And that's because until the amendment was filed with respect to the new debtor, it didn't provide any notice to third parties that this debtor's assets were encumbered. So, as a result, the priority will only run from the date of the filing of the amendment.

This can result in situations where Financing Statements have multiple priority dates with respect to different debtors and different collateral, because the same thing applies on an Amendment to Add Collateral.

When it comes to an Amendment to Add a Secured Party, the added secured party becomes a secured party of record. And it has no effect on the priority because it doesn't change the scope of the security interest. It only changes who's entitled to enforce the security interest and amend the Financing Statement. So there is no priority effect on an Amendment to Add a Secured Party of record.

Another type of Party Amendment is the Change Amendment. The purpose of this amendment is to change the name or address of either a debtor or a secured party of record on the Financing Statement.

This type of amendment typically applies to a party that is already of record. So it'll apply to a debtor or to a secured party that's already on the Financing Statement. It's not something typically that's used to add a different debtor or secured party.

But from a filing office perspective, they treat these much the same way as they would an Add Party Amendment. If the name that is provided is not already of record, then they will take the new name and add it as an additional debtor or as an additional secured party.

Remember, amendments always add to the record. They never delete. And as a result, the old name will continue to show up, even though an amendment has been filed to change that name.

So the new information that's provided becomes part of the Financing Statement. And any new name for a debtor, for example, becomes added to the searchable index. So a search under the new name will find that Financing Statement that was originally filed under the old name. A search under the old name will also continue to find the Financing Statement. And again, the original information that was on there remains part of that Financing Statement.

Next up is an Amendment to Delete a Party. This is used to remove a debtor or a secured party from the scope of the Financing Statement. An amendment such as this has to be authorized by the secured party of record.

And the effect of this is that the party named is deleted from the record. So if a secured party is deleted, it means that the secured party's interest is no longer perfected by the Financing Statement. If a debtor is deleted, that means that the debtor is no longer within the scope of the Financing Statement.

So the party named is deleted from the scope of the Financing Statement, but remember, an Amendment to Delete a Debtor is not going to remove the debtor name from the searchable index.

This can cause heartburn for debtors and lenders and legal counsel, because it'll keep showing up to a year past the lapse date after it lapses by time. So it's important to understand that just because it shows up, doesn't mean it's still effective.

So the filing office has to maintain these records as a matter of statute. They have to be in the searchable index until the record lapses, and then they have to maintain it so it can continue to be searched until at least a year after the record lapses by time.

So just because a debtor shows up doesn't mean the Financing Statement is effective with respect to that debtor. That's part of the cumulative nature of amendments.

There are some limits to deleting a party. An amendment that purports to delete all debtors or all secured parties of record isn't effective. The filing office will probably accept it, but it has no effect. It won't delete a party if there's nobody to replace them.

Also, I want to point out, too, that deleting a party has a retroactive effect as well. When you delete a debtor, it's as if that debtor was never part of the Financing Statement. Just like a Termination terminates Financing Statement, deleting a debtor terminates the debtor from that.

And same thing with a secured party. If the secured party is deleted, it's as if the secured party was never perfected by that Financing Statement.

A couple of tips here. To terminate a Financing Statement with respect to only one of multiple debtors, use the Amendment to Delete the Party. Don't terminate, because the termination affects the Financing Statement as a whole, whether intended or not.

And again, remember that it will not delete the name from the searchable index. Debtors may not be happy about that, that it'll continue to show up, but it has to be explained to them why. The filing offices simply can't purge the records in that type of situation.

Now, I'll move on and talk about Collateral. The next is the UCC3 Add Collateral Amendment. Here, the idea is to bring new assets within the scope of the Financing Statement. Again, this type of amendment must be authorized by the debtor because it's expanding the scope of the Financing Statement to additional assets.

However, the debtor's authority doesn't have to be indicated on the UCC3 record. Just like a debtor has to authorize the filing of an initial Financing Statement, there's no place on there where the debtor indicates that they have authorized the filing of that.

So once a UCC3 Amendment to Add Collateral has been filed, it perfects that security interest in the added collateral. It will do so, though, without retroactive effect. In other words, it's only effective for the added collateral from the date the amendment was filed. And that's because, until that date, the Financing Statement did not provide any notice to third parties that that added collateral was encumbered.

Delete Collateral Amendment, this amendment is designed to remove collateral from the scope of the Financing Statement. It used to be called a Partial Release. In this type of case, the secured party of record must authorize the filing to delete collateral. Once it's filed, the collateral that's described in the amendment is no longer subject to perfection under the security interest.

One word of caution here. Make sure that an Amendment to Delete Collateral does not inadvertently delete all collateral. An Amendment to Delete All Collateral would be effective, and it would delete all collateral, and the filing offices will accept it. This is a potential error that has happened and could continue to happen, so just be aware of this and be prepared to just double-check and make sure that it's not inadvertently deleting all the collateral.

Next up is an Amendment to Restate Collateral. This is a very helpful type of amendment, but people don't always understand what it means. The idea here is to allow for multiple additions and deletions with one amendment, rather than filing a bunch of separate UCC3 Amendments.

And it does this by replacing all prior collateral descriptions. That's what a Restate Collateral does. It's like starting over with your collateral description.

When an amendment is filed to restate collateral, if it expands the scope of the collateral, it will have priority only with respect to the expanded collateral from the date the amendment was filed, but it will maintain its original priority with respect to any collateral that was covered by the prior descriptions.

So it can have both a retroactive and an immediate effect. It depends on just whether collateral is being added as part of that restatement.

Here's an example of what a Collateral Restate looks like. Here, they've described all equipment, and then they provided a Schedule A, which is not included here, and on that Schedule A is all of the equipment. So that's one way to do it.

And this will become the collateral description upon filing. It will replace all the prior collateral descriptions. But using this type of amendment does create a trap because it replaces all prior collateral descriptions. Any error or omission when restating the collateral may leave the secured party without the degree of perfection or priority that they expected.

One example is a case of Northern Beef Packers. What happened here was the secured parties had a blanket security interest on all the debtor's assets. Later, the debtor pledged two additional assets, and the secured party filed an Amendment to Restate the Collateral and described just the new assets, which were actually a very small part of the collateral.

Well, the debtor filed for bankruptcy, and the bankruptcy trustee was able to limit the secured party's security interest to the collateral described on the restated collateral description. In other words, they lost the perfection and the vast majority of the collateral because they didn't include it as part of the restated description.

So it's very important to do it correctly. Always provide the full collateral description on a Restated Collateral Amendment, just as if this was the initial Financing Statement, because if there are any errors or omissions, that may leave the secured party unperfected or subordinate in priority.

To wrap up, I want to cover a couple of special cases that I get a lot of questions about.

One is what happens if assignments are filed out of order? There's a lot of concern that, "Oh, this is going to create a problem with the chain of assignments, and it's going to be a real problem." Well, actually, probably not. The courts haven't addressed it yet, but remember that the effect of the assignment is that it adds a secured party of record.

Article 9 is a notice filing system. There's not a chain like there would be in real estate records, where you have a chain of conveyances. There isn't a chain in Article 9. It's more of a bunch of photos rather than a filmstrip.

And as a result, the effect of them being filed out of order is the same. Both of the signees become secured parties of record regardless of the order in which the assignments are filed, and there is no priority effect. They both become secured parties of record based on the priority of the Financing Statement, not the priority of when the assignments were filed. So really, there is no harm.

Of course, like I said, the courts haven't addressed this specific issue yet, but it shouldn't cause a lot of loss of sleep if this was to occur.

What happens if a Continuation or other Amendment is filed after a Termination Statement? This happens frequently. Well, the bottom line on it is that a Continuation Statement or Amendment filed after the termination will only continue or amend the Financing Statement to the extent the Financing Statement remained effective after the termination.

In other words, if the termination was fully effective and the Financing Statement ceased to be effective, then the Continuation or other Amendment really has no effect on the effectiveness of the record. You simply cannot revive a Financing Statement that's been effectively terminated by filing another Amendment.

Typically, when this happens, it can mean that a Termination Statement was filed without the secured party's knowledge. And they just assume that it's still fully effective, and it probably is, if that's the case.

Frequently, though, it's just also a mistake of the secured party. They might have a release department that handles Terminations and Amendments that release collateral or debtors, and they may have a different department that's responsible for Continuations and other Amendments, and sometimes the information doesn't communicate fully between them.

So the only way to know for sure what the effect of the Amendments after a Termination Statement will have is to conduct further inquiry to determine.

Tarik: All right, everyone. Well, that's all the time that we have for today. If we didn't get to your question, as mentioned before, we will contact you with a response after the webinar.

In just a moment, you'll also see a brief survey appear, and we invite you to provide your feedback on today's session. We thank you for everyone who joined us today, and we hope we see you next time.

Search results

• Search Search Please fill out this field.

What Is a UCC-1 Statement?

Understanding ucc-1 statements, types of ucc-1 statements.

• UCC Filing Effect on Credit Scores

Example of a UCC-1 Statement

What are the benefits after filing a ucc-uniform commercial code-1 (ucc-1) statement, how do you remove a ucc filing, how long does a ucc filing last, what is a continuation statement, the bottom line.

• Corporate Finance
• Corporate Debt

UCC-1 Statement: Definition, Types, and Example

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Dennis Madamba / Investopedia

A UCC-Uniform Commercial Code-1 statement is a legal notice filed by creditors to publicly declare their rights to potentially obtain the personal properties of debtors who default on business loans they extend. Often abbreviated as UCC-1, these notices are typically printed in local newspapers to alert the masses of the creditors’ intentions.

UCC-1s are required for all business loans under the Uniform Commercial Code (UCC) and establish a relative priority over which specific assets may be seized, and in what order, while solidifying the collection pecking order in cases where there are multiple lenders to the same debtor.

Key Takeaways

• A UCC-Uniform Commercial Code-1 (UCC-1) statement is a legal notice filed by creditors in an effort to publicly declare their right to seize assets of debtors who default on loans.
• UCC-1 notices are typically printed in local newspapers, in an effort to publicly express a lender’s intent to seize collateralized assets. 
• These forms are mainly used to smooth out collection processes, often by helping lenders secure court orders authorizing them to seize assets from delinquent borrowers.
• These forms must be filed with agencies located in the state where the borrower’s business is incorporated.
• There are two types of UCC-1 statements: blanket liens, and liens attached to specific collateral.

The UCC-1 statement serves as a lien on secured collateral , where the components and filing procedures are comparable to the lien requirements in residential mortgage loan contracts. The UCC-1 statement is a directive of the Uniform Commercial Code (UCC), which governs business deals and activities in the United States.

According to the ninth article of the UCC, titled “Secured Transactions,” a lender must incorporate completed UCC-1 statements in a business loan’s contract for it to be deemed effective. The statements must include detailed information about the borrower, and they must itemize descriptions of all assets named as the secured collateral for the loan. While virtually any type of asset may serve as such collateral, the most commonly used items include real estate properties, motor vehicles, manufacturing equipment, inventory, and investment securities such as stock and bond holdings.

As with any ordinary lien, lenders must perfect the UCC-1 statement by filing it with the appropriate agency in the state where the debtor company is incorporated. In most cases, UCC-1 statements are filed with the secretary of state’s office, which subsequently time-stamps the document and assigns a file number to the associated parties.

In industry jargon, the process of issuing UCC-1 notices is referred to as “perfecting the security interest” in the debtor’s property.

Lenders have the option of filing the following two types of UCC-1 statements:

• Specific collateral UCC-1 statements . These are most commonly used in real estate or equipment transactions. They give lenders first-order secured rights to real estate properties or specific collateral such as the equipment purchased with the loaned funds.
• Blanket lien . This gives the lender secured rights to a range of assets, as long as the terms of these liens are detailed in the collateral section of the UCC-1 statement. Lenders tend to prefer blanket or “all-asset” liens.

How a UCC Filing Affects Credit Scores

Like individuals, most businesses have a credit report and score . While a UCC lien will appear on a business’ credit report, it won’t necessarily have an immediate negative impact on the business’ credit score, unless the business should default on the underlying loan.

The loan attached to the UCC filing will also increase a business’ credit utilization ratio , which, if it gets too high, can negatively impact the score. Furthermore, the business won’t be able to use the same piece of property as collateral for a different loan if there is a lien attached to it.

Say a construction company named Alex’s Excavation applies for a business loan to purchase two new hydraulic excavators. Bank XYZ is interested in offering Alex a loan, and as part of the contract, it files a UCC-1. Shortly afterward, Alex’s Excavation loses one of its biggest construction contracts, and then another, and the company is forced to file for bankruptcy .

Because the company had several lenders, it’s likely that Bank XYZ would not be given first-order rights to Alex’s property and would have to wait until all other lenders were paid. However, because the bank filed a specific collateral lien on the two excavators, it received the property/cash mentioned in the UCC-1 statement in a timely fashion.

Filing a UCC-1 statement allows creditors to collateralize or “secure” their loan by utilizing the personal property assets of their customers. In the event of a customer defaulting on their loan or filing for bankruptcy, a UCC-1 elevates the lender’s status to a secured creditor, ensuring that it will be paid.

While rules vary by state, there are essentially two ways to remove a UCC lien:

• The first is to ask the lender to immediately remove the lien upon full payment of the loan by filing a UCC-3 statement.
• The other option, if your lender fails to file a UCC-3 after you’ve paid off the loan, is to visit your local secretary of state’s office and swear under oath that you have fulfilled the debt in full and request to have the UCC-1 removed.

A UCC-1 statement is effective for five years. After this five-year period, the lien becomes null and void.

A continuation statement is an amendment attached to a UCC-1 financing statement. Continuation statements extend the lender’s lien on the borrower’s collateral past the original financing statement’s expiration date. When a lender files a continuation statement, the continuation statement extends the UCC-1 financing statement by five years from the date of filing.

UCC filings let creditors notify other creditors about a debtor’s assets that are used as collateral for a secured transaction. UCC liens filed with the appropriate secretary of state’s offices serve as public notice of the creditor’s interest in the assets. To check for UCC filings, visit your secretary of state’s website.

National Association of Secretaries of State. “ UCC Filings .”

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

STATEMENT OF 81 COMMUNIST AND WORKERS PARTIES

Meeting in moscow, ussr.

Source: Statement of 81 Communist and Workers Parties Meeting in Moscow, USSR, 1960 . New York: New Century Publishers, 1961. Transcription and HTML Markup:   Juan Fajardo, for marxists.org, April 2010.

NOTE TO THE READERS

Statement by 81 marxist-leninist parties.

[3] In the document transcribed there is no indication as to where Section II is to have ended and Section III begun.  Responsibility for the omission appears to lie with the editors of Political Affairs magazine, as it also appears in another printing drawn from that source, in pages 76 to 97 of Communist and Workers' Parties' manifesto adopted November-December, 1960; interpretation and analysis. Hearings before the Subcommittee to Investigate the Administration of the Internal Security Act and Other Internal Security Laws of the Committee on the Judiciary, United States Senate, Eighty-seventh Congress, first session. Testimony of Jay Lovestone, January 26, February 2, 1961. Washington: US Government Printing Office, 1961.   A transcription published in Peking Review Vol. 3, No.49/50 (December 13, 1960) places the start of Section III here. [ MIA transcribers' note. ]