What are UCC Filings and How Does UCC Filing Removal Work?
The Uniform Commercial Code (UCC) establishes uniform regulations designed to be adopted by all states in order to encourage uniformity of laws. While Uniform Codes do not have to be adopted, most jurisdictions choose to adopt them in whole or in part in order to confirm with accepted practices throughout the country. The UCC, in particular, aims to streamline rules applicable to commerce and commercial contracts.
The UCC creates many provisions, but one of the things it does is establish rules for UCC filings. Brown & Charbonneau, LLP can provide information on what UCC filings are and on how they can be removed.
What are UCC Filings?
UCC filings are forms submitted by creditors. Creditors must give public notice of their interest in business assets when a business takes out a secured loan. A creditor will file a financing statement, or a UCC-1 form, in order to perfect its security interest in the collateral. For example, if a small business uses its building or land to secure a loan, the creditor could file a UCC-1 financing statement to perfect its security interest in the land. The creditor who files a UCC-1 filing establishes the priority with which the creditor will be paid in the event the debtor defaults or in the event the debtor files for bankruptcy.
The same standard UCC-1 form is used by all lenders within the United States in order to provide the required public notice of their interests in business assets. Forms must be filed in the office of the Secretary of State within the state where the debtor does business. If the business has locations in multiple jurisdictions or if the business is located on the border, the UCC-1 form can be filed in multiple states.
UCC filings are public information, and all of the details on a UCC-1 form are available to the public. UCC searches can be conducted by interested parties who wish to learn about a business’ debts or financial obligations. Creditors typically conduct a search of UCC filings before the creditor makes a secured loan upon which it intends to file the UCC-1 firm. The creditors goal in conducting the search is to make sure no other lenders have also filed a UCC-1 to perfect their security interest in the same collateral.
How to Remove UCC Filings
After a loan has been paid off, a borrower has the responsibility of asking the lender to remove the UCC filing on the loan. It is a good idea to make sure to make the request in a timely manner so nothing falls through the cracks and so there is not continued public information suggesting you owe money and a lender has a claim on property.
Brown & Charbonneau, LLP can help you to understand more about how UCC filings work, how these can impact your business, and how you can use UCC-1 filings if you serve as a creditor yourself. Call today to learn more. 714-505-3000