The Basics of UCC Searching and Filing
Uniform Commercial Code (UCC) filing, searching and monitoring can be complicated between debtor name variation, search logic differences, and various filing procedures. But filing, searching and monitoring properly can save your firm from many problems.
Getting and staying organized, paying attention to detail and keeping close track of the changes that may impact your filing position can be easy with the help of a few best practices.
Join Russ Lash of CSC® for a free webinar to learn:
- Debtor name ins-and-outs
- Common UCC pitfalls
- Hints for better UCC-1 and UCC-3 forms
- Easier options for successful debtor tracking
Annie: Hello, everyone, and welcome to today's webinar, "UCC 101: The Basics of Searching and Filing. My name is Annie Triboletti, and I will be your moderator.
Joining us today is Russ Lash. Russ is a financial account manager at CSC. He is responsible for building relationships with customers. And since joining CSC in 2010, Russ has improved the customer experience by shortening workflow turnaround times and decreasing processing time, including improving Uniform Commercial Code delivery times. And with that, let's welcome Russ.
Russ: Thanks, Annie, for the introduction. Welcome, everyone.
Before we get into the content, some facts about CSC. We are the business behind business. Founded in 1899, so we've been around for 120 years. Global company headquartered in Wilmington, Delaware. Over 60 years serving the financial industry with over 6 million UCC transactions processed annually and over 8 million UCC transactions monitored. So CSC is the largest U.S.-owned provider of the lien-related services like the UCC, registered agent, entity and litigation management, and also the digital brand services.
Today's agenda, questions to ask yourself, UCC searching, UCC filing, monitoring, arming yourself CSC resources. Then I'll show you the CSCFinancialOnlineSM demo, and then finish with questions and answers.
Questions to ask. Questions to ask yourself. Are you following searching and filing best practices? Also, are you filing against the right debtor names every time? And are you monitoring your portfolio for changes that may affect your lien position?
Next up is UCC searching. Searching best practices. So you see on this page we have an illustration. On the left, you have the search subject, and on the right the best search practice. So in this case, I will go down the line here, individuals. So with individuals, the starting point for every UCC search conducted on an individual is the driver's license.
Below that, we have registered organizations. Here, you would use the public organic record. Down below even further, collateral administered by decedent's personal representative. You want to search the name of the decedent. And then lastly, collateral held in a trust that is not a registered organization. So here, you want to search on the name put forth in the trust documents. If there is no name, you want to search on the settlor. So you want to always include name variations for due diligence purposes.
Next up is UCC filing. UCC filing, get the debtor name right. You want to understand the impacts of the 2010 Amendments. You also want to follow the best practices for filing against individuals and registered organizations.
Filing against individual debtor name. We have the "Only If." This means that the debtor name must be exactly what appears on the individual's driver's license. Also sometimes called the "Alternative A." Very strict for the filer. And if the license is expired or not issued by a filing state, then we want to default to a safe harbor.
So on the right side of the screen, instead of the "Only If," we also have the Safe Harbor. So the Safe Harbor, the name can be what appears on the driver's license, but other names may work as well. Sometimes called the "Alternative B," and it's also more forgiving for the filer.
Enactments and legislative status of the 2010 Amendments to UCC Article 9. So what we have here is a map of the United States. It's showing us which states are enacted with Alternative A, Only If, the dark blue. And then the states that are enacted with the Alternative B, which is also the Safe Harbor, in the teal. So as you can see it here that most overwhelming majority of the states are enacted with Alternative A, Only If.
So to review. Corporate debtor name best practices. So here we have an illustration showing us the type of entities and then also where you'd want to start at.
So corporations/LLCs, you want to obtain the public organic record. With a government charter entity, like a farm credit bank, you want to obtain the charter documents. Business trusts, say in Massachusetts, you want to obtain the record filed with the state under the state law. And then, lastly, entity created by legislation, like Fannie Mae, you want to find the statute that created the entity.
This is very important. The name on the UCC must match the articles of incorporation. So in this case here, we have Alvo Grain and Feed, Inc. So the articles of incorporation state that it's Alvo Grain and Feed, Inc. "and" spelled out. The debtor name on the UCC was Alvo Grain & (ampersand) Feed, Inc. So the financing statement was found to be seriously misleading, and the secured party lost a large claim because of the difference between the "and" and the ampersand.
UCC filings, where to file. So the general rule of filing would be to file in the central filing office where the debtor is located, generally the secretary of state office. But there are exceptions in a couple states, one being Georgia. The other one, Louisiana. So in Georgia, you want to file at the county level. Louisiana, you want to file at the parish levels because Louisiana doesn't have counties. They have parishes. So you would file at the parish level. However, there are some collateral exceptions, such as a fixtures, timber to be cut, and minerals to be extracted. So the filing location for collateral exceptions, like the fixtures, timber to be cut, and minerals to be extracted would be the office where a mortgage would be recorded on the affected real property.
UCC filings, determining the location of debtor. So up here, we have another illustration showing us on the little teal boxes here which type of entities, and then also, on the right, determining the location.
So to start off, you have individual. So with an individual, you want to go at the location of the principal residence, so you want to file location of the principal residence.
With the registered organization under the state law, wherever they're organized or incorporated. Registered organization under the federal law, where designated by law or District of Columbia.
Other non-registered organization, that would be at a place of business, at the chief executive office if more than one. And then also, the jurisdictions without a filing requirement, that would be the District of Columbia.
Okay. Next up is monitoring. Portfolio monitoring. Changes in your debtor's name or status can affect your lien position. So it's crucial to monitor your portfolio for changes and to prevent lapsed filings. And there are simple, automated ways to receive alerts when things change. So we have several ways to monitor activity.
First is expiration tracking. Track your UCCs for approaching expiration. Here, your emailed notification of approaching dates, view copies of acknowledgements, the filing numbers auto-populated into the UCC-3, the UCC-3 being the amendment type, flexible reporting, and the notification frequency of your choice. We can send you expiration reports daily, weekly, or monthly.
Second is corporate tracking. So with corporate tracking, we'll notify you when your corporate debtor changes their corporate name, falls out of good standing, dissolves or merges.
Third is debtor tracking. So debtor tracking, we'll alert you to new filings against your debtor, including new lending and terminations, even yours. We'll send email alerts with links to the tracking results. This will allow you to evaluate findings and request copies if needed.
And fourth is bankruptcy tracking. So any delay in responding to bankruptcy filings can be costly. So with bankruptcy tracking, we'll monitor court records and then compare them to your debtor name, street address, city, state, and ZIP Code.
Arming Yourself, some CSC Resources. One of our resources is called Secured Party Representation, or also what we call SPRS. So with SPRS, as you know, the UCC financing statements are public record. So that means that anyone can access your customer list by running a search, a UCC search. So by using a secured party representative, it will prevent competitors from identifying UCC filings. And then also with SPRS, it centralizes the inquiries. Now what that means is we have a dedicated team here to handle the SPRS inquiries.
Another resource we have is the CSC blog. So CSC will provide you with an archive of filing office closings and communications, pending and new legislation, UCC Article 9 updates, such as the couple below here, the Mississippi updates and then also one in Delaware.
And then also, we urge you to check out cscglobal.com/resources where you can find whitepapers, filing guides, and also on-demand webinars.