UCC-1 financing statement


A UCC-1 financing statement is a legal form
that a creditor files to give notice that it has or may have an interest in the personal
property of a debtor. This form is filed in order to “perfect” a
creditor’s security interest by giving public notice that there is a right to take possession
of and sell certain assets for repayment of a specific debt with a certain priority. Such notices of sale are often found in the
local newspapers. Once the form has been filed, the creditor
establishes a relative priority with other creditors of the debtor. This process is also called “perfecting the
security interest” in the property, and this type of loan is a secured loan. A financing statement may also be filed in
the real estate records by a lessor of fixtures to establish the priority of the lessor’s
rights against a holder of a mortgage or other lien on the real property. The creditor’s rights against the debtor and
the lessor’s rights against the lessee are based on the credit documents and the lease,
respectively, and not the financing statement. Pursuant to the standards set forth in the
UCC, the financing statement need only contain three pieces of information:
the debtor’s name and address the creditor’s name and address
an indication of the collateral, which may be very general
The financing statement is generally filed with the office of the state secretary of
state, in the state where the debtor is located – for an individual, the state where the debtor
resides, for most kinds of business organizations the state of incorporation or organization. Many states have a state agency that operates
under the secretary of state, which is tasked with overseeing business organizations and
activities, including receipt of financing statements. However, an exception exists if the collateral
is something that is tied to a particular piece of real property, such as timber, mineral
rights, or fixtures. In that case, the filing must be made in the
county where the property is located, usually in the recording office or county court, because
that is where third parties are most likely to search for such record. In the case of a loan secured by personal
property collateral, the filing of a financing statement gives notice of a lien against the
property so that other lenders or buyers of the personal property will know of the security
interest. In the case of a filing of a financing statement
by a lessor of fixtures, the filing of the financing statement gives notice of the lessor’s
interests to others who acquire an interest in the real property and related fixtures. The financing statement does not create a
lien nor does it create any additional rights against a lessee in favor of a lessor, the
filing of a financing statement just gives notice of whatever rights the creditor or
lessor have under their loan documents or lease, respectively. References

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