Searching UCC Filings? Look out for These Common Mistakes
Posted by Brooks Ferrett
August 20, 2021
Searching UCC filings might sound simple, but the process has its nuances. Avoid these pitfalls and your searches will be much easier.
The Uniform Commercial Code, or UCC, is a set of suggested laws divided into nine articles. All of the articles relate to commercial law. Article 9 of the UCC addresses security interests that individuals or companies may create to protect their rights as a creditor if the debtor defaults. The creditor records a UCC filing with the secretary of state in which the debtor resides or the collateral “lives,” creating a public, searchable record. Should the debtor file for Bankruptcy, the UCC filing moves them up in the order of the “who gets repaid first” list. All the way to the front? No, federal and state governments are first, followed by wages, bank loans, but a UCC filing can put a creditor right behind that group.
UCC filings are searchable, but who would want to search for one?
Remember, a UCC filing is a public record. And while anyone can search for one, the two most common “UCC searchers” are the filer and the potential lender.
The filing party should search for its UCC filing, shortly after it has been submitted, to ensure that it was indexed correctly. An inaccurate UCC filing can present problems in the future. Additionally, potential lenders (and their representative counsel) search UCC filings, to get a sense of “what’s out there” on the potential loan recipient.
Searching UCC filings: common mistakes
While searching UCC filings might sound simple, the process has its nuances, much in part thanks to the fact that UCC search logic is not nationally standardized and varies state to state. Should you need to conduct a UCC filing search, here are a few things to keep in mind:
- Know where to search! Searching UCC filings happen at the state level. Be sure you’re searching in the right one. Know the home state of the corporation or individual or where the asset is physically stored. With that information, your best bet is to search in both states.
- Have the right name! If you’re searching for an individual, there’s a difference between “Bob,” “Rob” and “Robert.” For companies, there’s a difference between “Microsoft” and Microsoft Software.” The point is this: knowing the exact name of who or what you’re searching for will help you get the right result.
- If you believe a company has business activity in the state, you can search the corporations division of the Secretary of State to see if they are registered to do business in the state, and also confirm the correct name of the business. In most cases you can do this for free online.
- Don’t forget fixture filings! Fixture filings are county-level UCC filings. They apply to collateral that are affixed to property, or would take a considerable amount of effort to physically move. (Think industrial refrigerators, restaurant equipment, or Tesla home battery packs.)
This sounds like a lot of work
It can be. For the inexperienced, searching for UCC filings usually isn’t second nature. But here at Incserv, we have seasoned professionals with decades of UCC experience, ready to help you out. You can get started instantly with our UCC Order Form.