UCC Search Basics for Lenders

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Annie: Hello, everyone, and welcome to today's webinar, "UCC Search Basics for Lenders." My name is Annie Triboletti, and I will be your moderator for our session.

So joining us today are Russ Lash and Julia Cleaver. Russ is a financial account manager at CSC. He is responsible for building relationships with our customers, and since joining CSC in 2010, Russ has improved the customer experience by shortening workflow turnaround times and decreasing processing times. Russ has also helped to improve Uniform Commercial Code delivery times for our clients. Julia is a sales engineer at CSC, specializing in UCC filing solutions and workflow optimization. Since joining CSC in 2006, Julia has worked to provide comprehensive solutions to our clients that specialize in secured transactions. Julia provides initial onboarding and training as well as in-depth demonstrations of CSC's comprehensive UCC portfolio of solutions, including Lien Perfect for Lenders.

And with that, I'd like to welcome Russ and Julia.

Russ: Thanks, Annie, for the introduction. Before we dig into the content, some facts about CSC's UCC business. We monitor 9 million UCCs annually. We process 7 million UCCs annually. About 3,000 out of the 5,000 UCC customers we have consist of banks, lessors, factors, and capital companies. We also maintain a 91% NPS. More about that later. And we're the largest UCC database in the industry.

These are our NPS. NPS stands for Net Promoter Score. It is a customer loyalty and satisfaction measurement. Scores at 70% and above are considered outstanding. Again, CSC averages 91% among these 4 areas, in customer service, accuracy, knowledge of UCC requirements, and responsiveness.

We are the world's leading provider of business administration and compliance solutions. As you can see from this map, we are spread across five continents. In this map, you can see that CSC has, indeed, a global presence in the Americas, Europe, Middle East, and Asia-Pacific region.

CSC doesn't only offer UCC and due diligence solutions, but also business compliance, domain security and brand protection, funds, and capital markets.

Today's agenda, UCC concepts, search basics and best practices, additional resources. There'll be a CSC Lien Perfect for Lenders demo, which Julia will show. And then we will finish off with questions and answers.

Essential UCC Concepts: Perfection and Priority. Those are two big names in the UCC world. First, perfection. Perfection protects third parties that are not subject to the security agreement. The most common method is by filing a UCC financing statement, also referred to as a UCC1. It also makes security interest enforceable against the claims of third parties.

With priority, that's the order in which competing claims are satisfied. The general rule is that priority ranks from the earlier time of filing or perfection, Section 322 of Article 9, with the exception of purchase-money security interest or PMSI. That would be found in Section 324 of Article 9.

Essential UCC Concepts: Notice Filing. The UCC is a notice filing system. So it merely indicates that a security interest may exist. UCC records provide minimal information. So UCC records do not provide all the details of a transaction. Because of that, duty of further inquiry. Interested parties are not permitted to rely solely on the contents of filed UCC records. So additional research may be needed.

More Essential Concepts: Role of the Filing Office. The role of the filing office is ministerial. Article 9 removed filing office discretion from the filing process. Filing is a machine process, which means that the filing office will record the UCC, but not review or check for errors or omissions of that UCC form.

Duties. Index records for retrieval by debtor name or file number and will reject only for a reason set forth in Article 9, Section 516(b).

The filing office has no duty or power with respect to perfection, priority, or effectiveness.

All right. Next up, Search Basics, Basics and Best Practices. CSC's Role in UCC Searching. CSC provides UCC self-searching capability, yielding instant results with CSC Lien Perfect for Lenders, which you'll view a demo later on with Julia. So important things to know. CSC does not provide legal guidance, and CSC does not interpret UCC search results.

So some UCC Search Basics, Customer Responsibilities. It's to obtain legal entity names, ensuring that they are spelled correctly. Identify the state of incorporation and, where applicable, principal place of business. Determine what is needed to be searched and where. And also use reasonable diligence investigating the results.

Names to Search. Debtor's correct name, you want to check the articles as amended. You want to check individual's correct name and name on the driver's license. For prior debtor names, Article 9, Section 507, you want to check for amendments to articles that modified the name. You want to ask individuals for prior name use information. And for merged or acquired business, with Section 508, you want to check articles for any entity merged out of existence.

UCC Search Locations. Location of the debtor. You want to determine the jurisdiction under Section 307. Search filing office designated by Section 501(a)(2). And you also want to search prior jurisdiction for one year following move that changed the governing law.

With respect to location for fixtures, timber, or minerals, you want to check the local law of jurisdiction where goods are located that governs the perfection by a fixture filing. That's Section 301(3)(A). And then you also want to search the filing office designated by Section 501(a)(1). You also want to search, according to Section 501(b), office for fixtures of a transmitting utility.

UCC and More. So I get this question a lot. Folks will ask, "What is considered a standard due diligence search?" So typically, it's a full suite lien and litigation search, which should include UCC search, federal tax lien search, state tax lien search, judgments, pending suits, and bankruptcy. So from state to state, there is a variation in where liens are filed.

UCC Filing Office Information. Searching through dates, that would be the date that a jurisdiction has indexed lien and litigation records. Items filed after the search through date are unlikely to appear on search results. Indexing errors. Clerical errors can be made by filing office. An error, for example, relating to the debtor name will affect the results. And lapsed filings. Lapsed UCC filings are not reflected on searches. If you want a lapsed search, you can also get that in Lien Perfect.

UCC Order Completion. You want to verify the search includes copies of all records. Courts impute to the searcher knowledge of the full contents of each filed record. You also reconcile file numbers, file dates, and other information.

Determining the effect of record. Caution: It's impossible to determine the effectiveness from the record alone. Because UCCs are mere notices, they give the filer the benefit of any doubt. You also want to understand the effect of all UCC3 amendments. And then also, contact the parties involved to learn the full state of affairs.

UCC Search Traps. The termination that does not terminate. Allegedly, terminated financing statements may be fully effective. This is very important to be aware of. The UCC3 assignment that does not assign. Assignor remains a secured party of record. Also collateral interpretation. The same asset can be covered through any number of different collateral descriptions. And failure to conduct further inquiry. Searchers, again, cannot rely on the public record alone. Again, additional due diligence may be needed.

Next up, Additional Resources. So here's some information on UCC search results in Lien Perfect. UCC search results in an easy-to-read, executive-style format. Allows for quick and efficient review of UCC search results. The report can be delivered instantly upon the completion of an order, as instant search results. And the preferred formats, you can get a UCC search report in either PDF or Excel format in Lien Perfect.

Next up, some information about CSC Lien Perfect for Lenders. CSC Lien Perfect for Lenders is a next-generation platform redefining how lenders manage UCC filings. Built on decades of industry expertise and direct client feedback, this is an all-in-one solution that was designed specifically for the financial services industry, and it includes the industry's largest online UCC database, providing more UCC search records and delivering faster results than any other UCC filing service.

To the right, you'll see some of the highlights of Lien Perfect. Some of these you'll also see in Julia's demo.

CSC also offers business-to-business integration, also commonly known as API integration, to securely integrate your existing customer relationship management or CRM and loan processing systems with Lien Perfect for Lenders for greater accuracy and efficiency in the filing process. You can integrate with such names here as Salesforce, Odessa, LaserPro. We can also work with your proprietary system.