A Uniform Commercial Code – 1 (UCC-1) is a form filed by a creditor to give notice that said entity has an interest in the property of another person or entity that owes the creditor according to a debt agreement.
The lender must file a UCC-1 to protect their interests in the event the borrower defaults or declares bankruptcy or in a case where assets of the borrower would be seized or sold off.
UCC Search Best Practices
It is critical to cast a wide net when conducting a UCC-1 search to ensure you have as much relevant data as possible.
Use this checklist for best results:
Obtain all legal names and addresses used by the borrower during the past seven years
Be sure you are searching the precise names of all entities
Search for all aliases and DBAs
List all previous locations, addresses, and properties held by the borrower, both owned and leased
Obtain driver’s license information for all concerned parties
Search tax returns, credit reports, and any pending litigation
UCC Filing Best Practices
UCC filings require strong attention to detail. Your findings must be clear, comprehensive, and accurate, or you stand to risk losing a great deal of time and money.
Your representation of the debtor’s name is of primary importance as even the most innocuous of errors or omissions can adversely affect your filing status.
Debtor Name Best Practices
While it might sound easy on the surface, submitting an accurate debtor name is a bit more complicated than you may think. The name must be an exact match to the debtor’s most recent charter document.
Check your filing to ensure these details are correct:
Use of the symbol “&” instead of the word “and”
Pluralizing a company name or a word
Using a DBA
Adding extra spaces
Using incorrect punctuation
Using numerals instead of spelling out numbers
State Variations to UCC Law
Though the UCC is binding in all 50 states, there are some variations in the law. In some cases, a state or territory may not recognize or has not yet adopted specific articles. The variation happens when a state or territory altering the language to suit their specific needs. Additionally, there may be different statutory interpretations between jurisdictions.
Some states do not allow UCC filings for multiple functions under Article 9. For example, Louisiana failed to adopt Article 2 and 2A, which covers the lease of real property; and California has its own commercial code.
Common UCC Mistakes
It is remarkably easy to make a mistake when filing a UCC. Though the process can be tedious, meticulous attention to detail is crucial.
Some of the more common UCC filing mistakes include:
Filing using a DBA, assumed, or fictitious name
Not using the debtor’s full and accurate legal name
Wrong type of organization
Incorrect or incomplete address
Filing in the wrong jurisdiction
These errors are not just an annoyance – they can end up being very costly, especially if the mistake is discovered during the course of litigation.
How to File Better UCC-1 & UCC-3 Forms
If you have never filed a UCC, working with a corporate filing specialist is highly recommended. Companies like Legalinc can help you file quickly and accurately, ensuring that you obtain the legal protection you need. Submit a UCC request today.