UCC Financing Statement FAQ

What are UCC Financing Statements?

Under the Uniform Commercial Code – the standard through which all 50 state governments govern most commercial transactions excepting real estate – a financing statement is filed when any creditor is taking a security interest in a debtor’s personal property. The role of the financing statement is then to “perfect” the interest (under Article 9 of the Uniform Commercial Code). This is accomplished with a UCC Financing Statement.

Though most UCC Financing Statement forms are handled with the document UCC 1 Financing Statement, there are additional forms that can still apply to a similar type of transaction. These forms can include amendments to previous statements, add additional parties to the transaction, or provide addendums.

What are the different types of UCC Financing Statements?

Though most financing statements filed will simply require the use of a UCC 1 Financing Statement form, the truth is that many different transactions can require many different types of reporting. That’s why there are different types of these statements which should be utilized as needed. They include:

• UCC 1 Financing Statement: the “standard” statement for filing a relevant transaction under the UCC.
• UCC3 Financing Statement Amendment: Like a tax filing amendment, this form allows changes to be made after a Financing Statement has already been filed at the state level.
• UUC1Ad Financing Statement Addendum: While an amendment is a change to the original filing, an addendum is simply the addition of something to the filing without changing the original filing itself.
• UCC1AP Financing Statement Additional Party: Adding another party to the transaction is sometimes necessary in order to completely accurate report the transaction taking place.

Additionally, the forms UCC3Ad and UCC3AP will help you to make additions with changes if necessary, as these are further forms of financing statement amendments.

What kind of information is included in the UCC Financial Statement?

The UCC specifies that there must be three factors present in a UCC Financial Statement: the name and address of both the debtor and the creditor, as well as a description of the collateral.

What is “perfecting” and how does it matter to creditors?

When a creditor is filing a UCC Financial Statement, they are giving public notice that they hold interest in the property of the debtor. This is said to be “perfecting” the interest of the creditor. The issue of “perfecting” simply refers to the public notice of the collateral that will allow the creditor to take possession of the debtor’s property if payment is not received. Through this process, the loan then becomes a “secured” loan. With the filing of the UCC Financial Statement, the creditor is notifying the public that they will be able to repossess the collateral in question should payment not be made on the secured loan.

This filing will also create a lien on the property. In the case of a lien, the debtor will not be able to get rid of the property if they haven’t already paid off the debt in the secured loan. The “perfecting” of the interest then allows the creditor to feel more comfortable in making the loan.

Do these statements change from state to state?

As a general rule, no. All 50 states adhere to the Uniform Commercial Code, with only slight degrees of variance in the levels to which they adopt it. Though the filing itself of the UCC Financial Statement should generally be handled in the debtor’s state, the actual form itself will not vary from state to state. This is especially true considering how simple the information listed in the UCC Financial Statement is; there is not a lot of room for variance from state to state.

What kind of property can be used to secure a loan?

Collateral can include just about anything that the two parties agree to, though the existence of certain types of fixed collateral (like real property or mineral rights) can require that the filing of the UCC Financing Statement be made from a certain county – the county where the collateral is located.

How do I know which UCC Financing Statement to use?

Simply read a description of each and use the statement that best applies to your situation. If this is the first time you’re filing a UCC Financing Statement, the chances are that you’ll be using UCC-1 Financing Statement because there will be no need for amendments or addendums yet. If you need to change a mistake on this UCC Financing Statement, you can simply file an amendment to more accurately describe the transaction.

Is there an ideal way to file a UCC Financing Statement?

There is no ideal way except to make sure that you follow the regulations of the relevant state and/or county. You can make a paper filing or decide to file electronically. As long as you pay the fee associated with making this filing and fill out the information accurately, there should be no problems in filing the statement.

How can I be sure that my UCC Financing Statement is valid?

Other than the transaction described in the statement being valid itself, filing a valid UCC Financing Statement is very simple. The form only requires basic information that outlines the specifics of the transaction and can often be filed electronically. There is usually a modest fee associated with filing a UCC Financing Statement in most states, but the fee typically runs well under $100 across many states.