Article 9 of the UCC

The Basics of UCC Filing and Searching

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UCC Searching and Filing

Basic Principles
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Scope of Article 9

Applies to Transactions Where Assets (Collateral) Are Given in Order to Secure Financial Obligations The Right In the Property Is Called a Lien The Lien Attaches Through the Security Agreement The Lien Is Perfected by Filing a Financing Statement (UCC 1) Mostly Personal Property Involved

Machinery Equipment Accounts Receivable

Some Real Estate Related Filings Also May Apply

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Advantages of Perfection

None Against the Debtor

The Security Agreement Sets Out the Obligations of Each party to the Other

Perfection Gives the Filer Advantages Over Potential 3rd Parties That Later May Claim an Interest in the Same Property:

Other Creditors of the Debtor Debtors Trustee in Bankruptcy Purchasers of the Assets

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UCC Basics

What To File
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National UCC Standard Forms

The National Forms Are Now the Statutorily Recognized Standard

UCC 1 - Financing Statement UCC 3 - Amendments

Acceptance Is Not Discretionary States Have No Need to Create and Maintain State Specific Forms A Significant Step In Realizing Uniform Administration of Article 9

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Contents of Financing Statements

Debtor Names
Debtor Names Must Be Stated Precisely on the Financing Statement Names of Registered Entities Must Appear Exactly as They Do on the Public Record Tradenames Standing Alone Expressly Deemed Insufficient Tradenames can be added as additional debtors.

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Contents of Financing Statements

Secured Party Names

Only One Secured Party Needs to Be Indicated on Financing Statements Even Where More than One Exists One Secured Party Can Act as the Representative for the Other Secured Parties

no need to indicate representative capacity

Where More than One Secured Party Is Indicated Subsequent Filings By Any One Secured Party Affect Only Its Own Status

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Contents of Financing Statements

Collateral
All Assets or All Personal Property Indication Permitted Collateral Descriptions Also Permitted Where the Description Is Reasonable Specific Collateral Can Be Indicated Blanket Collateral Statements Also Permitted

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Sample Blanket Filing Attachment

All of the following property that is now or hereafter at any time used in connection with (without regard to the duration of the period of such use), or now or at any time relates to or arises as a result of, the operation of the business known as Heritage Hills Memory Gardens: (i) all of the Debtors inventory, including all goods, merchandise, raw materials, supplies and other tangible personal property, now owned or hereafter acquired, and all documents now and at any times covering or representing any of said property; (ii) all of Debtors accounts, accounts receivable, contract receivables, contract rights, notes, drafts, acceptances, instruments, chattel paper and general intangibles, and all guarantees and suretyship agreements relating thereto and all security for payment thereof, now and hereafter existing or arising; and (iii) all of Debtors equipment, including all furniture, furnishings, machinery, fixtures, storage shelves and other goods used in the conduct of Debtors business, including, but not limited to, all motor vehicles and rolling stock, now owned or hereafter acquired; together with (a) all increases, parts, fittings, accessories, equipment, special tools and accessions now or hereafter attached thereto or used in connection therewith, and any and all replacements of all or any part thereof; (b) any profits now or hereafter acquired from or through any of the foregoing; (c) any products now or hereafter acquired from or through any of the foregoing; (c) any products now or hereafter manufactured, processed, assembled or commingled from any of the foregoing; and (d) any and all proceeds received should any of the foregoing be sold, exchanged, collected or otherwise disposed of (all of which is hereafter called the Collateral).

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What Is a Fixture Filing?

First: What Is a Fixture? Look to Several Factors:

Degree of Physical Affixation Intention of the Parties Reasonable Expectations of Third Parties Extent to Which Presence of Fixture is Critical to Functioning of Real Estate

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Fixture Filings

These Filings Have Additional Requirements

Must Show It Covers That Type of Collateral Must State It Is to Be Filed in the R/E Records Must Contain a Legal Description of the R/E Must Indicate Name of a Record Owner if Other than the Debtor

These Filings Have Special Advantages

Filer Obtains Priority Over a Prior Mortgage

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UCC-1: Common Mistakes

Incorrect Debtor Names Including DBA, AKA or FKA in Debtor Names Incorrect Filing Fee Submitted Omitting Required Information Concerning Entity Debtors

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UCC-3: Types of Amendments

Continuations

To extend the life of the financing statement by another five years To change or add critical information about the Debtor or the Secured Party To Add collateral, Remove collateral, or Restate the entire collateral description To transfer rights in a filing from one secured party to another To extinguish the lien prior to its five year lapse period

Party Amendments

Collateral Amendments

Assignments

Terminations

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UCC-3: Common Mistakes

Incorrect Filing Number Incorrect Date of Filing Continuation Not Filed Within Six Month Window Multiple Transactions on the Same Form

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Financing Statement in lieu of Continuation

Special Type of Filing:

New Type of filing created under RA9 This type of filing continues an old filing and changes the state of perfection at the same time It must be filed on a UCC 1, not on a UCC 3

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Financing Statement in lieu of Continuation

Special Type of Filing:

Requirements for Financing Statement in lieu of a Continuation:

must be filed in state required under RA 9 must satisfy requirements of RA 9 concerning exact debtor names, etc. must identify the Financing Statements being continued by filing office, filing dates, and file numbers, for the Financing Statements and the most recent Continuation Statements (if any) on file.

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Financing Statement in lieu of Continuation

Special Type of Filing:

Requirements for Financing Statement in lieu of a Continuation:

must state that these previous filings remain effective may continue more than one prior Financing Statement in these filings, but all prior filings included on one of these should be related to the same transaction

never attempt to continue all previous filings in a state in one in lieu of filing

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UCC Basics

When to File
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When to File Financing Statements (UCC 1)

As Soon As Possible

Even Before the Security Interest Attaches If Desired

Purchase Money Security Interests (PMSI)

Inventory Collateral (must be filed before debtor gets possession of the collateral) Non-Inventory Collateral (must be filed within 20 days of debtor getting possession of the collateral) Fixtures Filings (must be filed within 20 days of goods becoming affixed to the real property)

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When to File Amendments To Financing Statements (UCC 3)

For Changes to the Debtors Name:

Must Be Filed Within Four Months of the Name Change

To Continue a Current Filing:

Every Five Years Continuation Filings May Be Submitted No Earlier Than Six Months Prior to Expiration

In All Other Cases:

As Soon As Possible

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Acknowledgements of Filings

Acknowledgments of Paper Filings

available upon request of the filer the old standby file stamped copy still available

Acknowledgments of Electronic Filings

mandatory by statute contains all the information in the record contains assigned file number contains date and time of filing

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UCC Basics

Where to File
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Where To File Rules

General Rule:

Location of the Debtor Determines In What State to File

What Determines the Location of Debtor:

Registered Entities located in state of organization Non-Registered Entities located in state of chief executive office Individuals located in state of residence Foreign debtors deemed to be located in D.C.

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Where To File Rules

Location of the Collateral Controls in These Situations:

Fixture Filings Timber to be Cut Filings As-Extracted Collateral Filings Agricultural Lien Filings (RA 9-301 and 9-302)

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Where To File Rules

Most Filings Are Made in Each States Central Filing Office

For Example: Secretary of State; Department of Financial Institutions

A Small Number of States Permit Filings In Any Location Within the State

For Example: Louisiana; Georgia

Fixture Filings Are Made in Local Real Estate Recording Offices

For Example: Recorder of Deeds; County Recorder

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Where to File Rules

Delayed Revised Article 9

Alabama 1/1/02 Connecticut 10/1/01 Florida 1/1/02 Mississippi 1/1/02 Alabama, Massachusetts, Nebraska, New Hampshire, New York, Oklahoma, South Carolina, Vermont and West Virginia Alabama Mortgage Tax for county fixture filings only Florida Documentary Stamp Tax for all filings Maryland Recordation Tax for county fixture filings only Tennessee Recordation Tax for all filings

Do Not Issue Organization ID Numbers

Special Filing Tax Provisions

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Where to File Rules

Font Requirement

Illinois Requires 12 point font and all caps for the debtor and secured party name Indiana Copy of the filing must be sent to the debtor within 30 days Utah No attachments and 250 characters per page Wyoming Disk must be used after 300 characters

Debtor Notification

Collateral Description Limitations

Require Debtors Federal Tax Id Number or Social Security Number

North Dakota and South Dakota

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If the Debtors Organization Id is Not on Record, a Debtor Amendment must be Filed Prior to the Continuation

Where to File Rules

South Dakota Montana Sign in Box #9

Requires Signatures for Terminations

All Counties in the Following States are Rejecting Non-Fixture Terminations

Massachusetts, New Jersey, New York, North Carolina, Pennsylvania and Wisconsin Washington Counties Require old UCC-4 Fixture Filing Form

National Form Not Accept

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UCC Basics

Searching and Search Results

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Where Do Searches Need to Be Conducted?

Until June 30, 2006 Searches Must Be Made Where Debtor Is Located AND Where Collateral Is Located To Find Filings Made After 7/1/2001 Always Search in State of Debtors Location To Find Filings Made Before 7/1/2001 Always Search in Locations of Collateral and Chief Executive Office

determine what states in which to search determine what filing offices in which to search

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Against What Name(s) Should Searches Be Conducted?

The Debtors Correct Legal Name

This Is an Absolute Necessity Where Can This Be Found?

The Debtors Trade Names

This Will Be Necessary Until at Least June 30, 2006

This Is Strongly Recommended Since Filings Under Prior Names Usually Still Remain Effective

The Debtors Prior Names

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The More Complete Search

UCC Liens Federal Tax Liens State Tax Liens Judgment Liens Litigation Searches

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Why Search for Other Lien Types?

Part of Any Thorough Due Diligence Investigation These Are Not Consensual Liens

Good Possibility That Debtor Is Not Aware of Them

Apply to All Business Types In the Public Record of All 50 States Usually Found in the Same or Similar Filing Offices

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Why Search for Pending Litigation?

Also Part of Any Thorough Due Diligence Investigation There May be Active Cases Pending Against the Debtor in a Transaction These Cases May Have a Significant Bearing on the Position of the Debtor or the Value of Its Assets

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UCC Direct Services The Basics of Article 9