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UCC Article 9 Filing Basics

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Uniform Commercial Code (UCC) filing requirements differ by state, making it challenging to file without errors. Let CSC’s UCC experts be your guide!

Join us for our refresher course on UCC Article 9 Filing Basics, designed to explain the fundamentals of the Article 9 filing process. Intended for legal professionals who prepare and file UCCs, this webinar will provide an overview of essential UCC concepts, filing basics, and best practices.

Webinar transcript

Disclaimer: Please be advised that this recorded webinar has been edited from its original format, which may have included a product demo. To set up a live demo or to request more information, please complete the form to the right. Or if you are currently not on CSC Global, there is a link to the website in the description of this video. Thank you.

Caitlin: Hello, everyone, and welcome to today's webinar, "UCC Article 9 Filing Basics." My name is Caitlin Alaburda, and I will be your moderator.

Joining us today is Binh Nguyen. Binh is a senior sales engineer for UCC Lien Perfect and has been with CSC since April of 2014. He conducts training on CSC Lien Perfect and works alongside our customers to assist in the further development of the UCC platforms and for the law firm market.

And with that, let's welcome Binh.

Binh: Thank you, Caitlin, for the introduction and welcome, everybody, to today's webinar. Before we get started into the webinar, I just want to kind of talk a little bit more about CSC and what we offer.

As you can see on this slide here, we offer our services to over 180,000 corporate customers, over 10,000 law firms, over 3,000 financial market customers, and we represent 60% and more of the Best Global Brands.

We are present throughout the globe, and as you can see here we have a lot of offices in North America, in Europe, and in Asia. And you can see that our corporate offices are actually based out of Wilmington, Delaware.

As you can see on this slide, we offer many different services for all of our customers, including what you're going to be seeing here today is UCC search and filing.

Our agenda today covers the following topics. We're going to be talking about essential Uniform Commercial Code filing concepts, and then we're going to also talk about filing basics and best practices. We'll give you some additional resources, and we'll also include in that a demo of our UCC platform. And then we'll save some time at the end for Q&A.

Before we dive into the details of a UCC filing, let's discuss the overarching concept of a UCC. There are two essential concepts behind UCC filings — perfection and priority.

Perfecting a loan is most commonly handled by filing a UCC financing statement. Perfection is important because it makes security interest enforceable against the claims of third parties.

When a claim or claims are made, priority then comes into play, which is the order in which competing claims are satisfied. Generally speaking, priority rank is determined by the earlier time of filing or perfection.

With that being said, a UCC is a notice filing system that merely indicates that a security interest may exist. It's worth noting that UCC records themselves are not enforceable documents. UCC records provide minimal information, such as the debtor and secured party, but do not provide all the details of the transaction. It's important then for interested parties to take on the duty of further inquiry and not solely rely on the contents of filed UCC records to make their claim.

UCC filings are filed at their respective filing office. So please keep in mind that the role of the filing office is ministerial. Their duties include indexing records for retrieval by debtor name or file number, rejecting filings if they don't meet certain requirements, and reporting only on records that exactly match the search criteria after applying the standard logic, if any. Therefore, a filing office has no duty or power with respect to perfection, priority, or effectiveness of a file.

Now let's shift gears and discuss the basics of filing UCC filings and best practices to follow. Generally speaking, financing statements are effective for five years from the time of filing. There are certain exceptions for Wyoming, public finance and manufactured home transactions, and transmitting utilities.

The effectiveness of a filing may be extended for an additional five years by the filing of a continuation statement. Additional continuation statements may be filed every five years thereafter. It's important to note that continuation statements must be filed within six months before the lapse date.

Where the financing statement is filed is important as well. Generally speaking, the law of the state where the debtor is located governs perfection and priority. Where a financing statement should be filed depends on the type of debtor and their information, or I'm sorry their formation, and you can see the several examples on this slide.

There may be instances where the debtor's location lacks a filing system. Generally speaking, a financing statement should be filed in the jurisdiction or jurisdictions only if it has a filing, recording, or registration requirement to obtain priority over the rights of the lien creditor. If the debtor's location lacks a filing system, then it's possible to file the financing statement in the District of Columbia. Some examples where this may come into play is when a debtor is located in a foreign country or within some tribal jurisdictions.

When filing within a state, the general rule is to file at the central filing office, secretary of state, or equivalent. Of course, there are exceptions to this when filing in Georgia or Louisiana. If real estate-related collateral is involved, such as fixtures, timber to be cut, or minerals to be extracted, the filing location could be filed where the goods are located, and it also governs the perfection of that fixture filing, or filed in the office where a mortgage would be recorded on the affected real property.

In a financing statement, the name and address of the debtor and secured party are provided by the filer as well as an indication of the collateral. The purpose of the debtor name field allows for the retrieval of the record using clear and consistent rules.

The debtor name that's provided on a financing statement is solely for the purpose of the financing statement, so it doesn't necessarily have to be the actual name of the debtor. The filer has the responsibility of providing the correct name for the debtor, and it's critical that the exact name of the debtor is provided in the correct name field.

In this slide, we can see where the filer may have inadvertently caused issue with their filing by incorporating all of the debtor names into a field meant for one debtor name, or by putting "See Exhibit A" in the debtor field, or by putting an individual name into the field meant for an organization name.

For registered organizations, such as corporations, LLCs, trusts, etc., the filer should provide the name exactly as it appears in the public organic record. For individuals, the filer should provide the name indicated on the debtor's driver's license or state ID if allowed. If the collateral is administered by personal representative, then the filer should use the individual name of decedent and check the corresponding box to indicate the status of the collateral.

If the collateral is held in a trust, the filer should provide the name of the trust if it has a name or the name of the settlor or testator, and indicate the collateral is held in a trust. There are also other examples of which a debtor name where it needs to be used.

As mentioned before, the debtor name is critical. Even minor deviations can make the financing statement seriously misleading. The filing office cannot make that determination, so the responsibility falls on the filer. There are some instances where certain deviations are permissible, but the general rule of thumb is to ensure that the debtor name is exact.

Now there are certain examples where certain states will normalize the name of the debtor upon recording. So in this slide you can see an example where the filer had entered in the correct name, but the state had normalized the name upon recording the filing.

So now that we've discussed all the nuances of your financing statement, let's talk about some helpful tools that will allow you to file accurately all the UCCs. Our UCC filing platform is called CSC Lien Perfect, and it allows you to navigate through the complexity of the UCC filing rules accurately every time.

CSC Lien Perfect allows you to file with greater accuracy, allows you to also save time when filing. It will also help to simplify your filing workflow all while doing this on a secure platform.

So how does Lien Perfect help you file with greater accuracy? We have a few different features that are built into the application that will help you do so, including real-time validation. So what happens here is that draft filings are constantly evaluated based on the jurisdictional rules, including required forms, character limits, and jurisdiction-specific data capture requirements. And the real-time validation allows you to be able to see where you're missing required pieces of information or you're violating certain rules as provided by the jurisdiction that you're filing in.

Additionally, we also offer a party and collateral description library. What this does is it allows you to store frequently used secured parties and collateral statements so that way you can reuse them for any new filings, eliminating any data entry errors.

And lastly, we have the ability to auto-populate continuation and termination filings. So if your original filing or financing statement is within the platform, what you could do is you can then designate a continuation filing or termination filing and we'll automatically transfer the data that was on the UCC1 into the continuation or termination filing so that way you're not having to re-key or copy and paste the data over. It automatically will transfer over into the draft continuation and termination filing.

So how does CSC Lien Perfect allow you to save time when filing? What you can do with our application is to create single or multiple copies of a filing. So when matters contain multiple UCCs that are similar, you can seamlessly duplicate and update only the information that is different between these filings.

In addition to that, you can also have the ability to export single or in bulk export all your filings to a PDF. What this does is it allows you to with the click of a mouse be able to export your filing so that you can circulate it for review, print it out, or do whatever it is that you need to do with it.

And lastly, we have a global edit capability. What that does is it allows you to apply revisions to multiple filings at one time.

Next, how does CSC Lien Perfect help you to simplify your workflow? We allow you to organize your matters into projects and folders, and what this does is it allows you to be able to clearly be able to delineate the work by client, practice area, partner, or any other means that you like to use.

Additionally, we also offer a dynamic preview. So when you're preparing your filing, you'll be able to see the UCC forms and exhibits in real time as you're preparing them.

And then lastly, what you can do is you can get a forecast of the filing fees. So we provide an estimate of known filing fees, and we present that to you prior to recording so that you can anticipate what the cost will be.

CSC Lien Perfect allows you to do all the capabilities I've just mentioned, all on a secure platform. So the world's largest banks trust CSC, and in fact more than 3,000 financial institutions trust CSC because of our security measures. And what do we do in that case, or what do we provide from a security standpoint?

So all of our CSC applications and data are maintained on CSC servers in a U.S.-based ISO 27001-certified and also SOC-audited hosting environment. Additionally, we have SOC 2 Type II assessments that are conducted annually by third-party auditing firms to ensure that we follow those stringent security measures. And lastly, we employ stringent data access processes and controls so that way we can ensure that we provide you with that business continuity and disaster recovery to ensure that there is no interruption to your daily workflow.