Recorded Webinar - UCC 201: Advanced Issues for Searchers and Filers

UCC 201: Advanced Issues for Searchers and Filers

Please be advised that these free recorded webinar presentations have been edited from the original format (which might include a poll, product demonstration, and question-and-answer session). To set up a live demo, please complete the form to the right.

Know the basics of Uniform Commercial Code (UCC) searching and filing, but need a deeper understanding of purchase money security interests, fixture filings, and portfolio management? Then join us for a deeper look into more complex issues that can trip up UCC searchers and filers.

Join Lacey Bower of CSC® for a free follow up to our UCC 101: The Basics of UCC Searching and Filing webinar to learn best practices surrounding:

  • Purchase Money Security Interests (PMSI)
  • Fixture Filings
  • Post-Filing Pitfalls

This webinar is important for real estate, commercial, and corporate paralegals, legal assistants, legal secretaries, analysts, commercial loan officers, and anyone who works with UCC search and filing.


Webinar Transcript

Anu: Hello everyone and welcome to the today's webinar, "UCC 201: Advanced Issues for Searchers and Filers." My name is Anu Shah. I will be your moderator. Joining us today is Lacey Bower. Lacey works out of CSC's corporate headquarters in Wilmington, Delaware and has been with the company for nine years. She works with banks, lenders, lessors, attorneys, and corporations of all sizes. And with that, let's welcome Lacey.

Lacey: Thank you, Anu. So thank you everyone for attending today's session of UCC 201. I hope many of you attended 101 last month. And before we get into our webinar content I want to talk a little bit about why CSC is placed so well and knows so much about UCCs. So we're a company that's well over a 100 years old. We are headquartered here in Wilmington, Delaware and we've been doing the UCCs since the inception of the uniform commercial code so over 60 years. Last year we processed over six million UCC transactions and we monitored over eight million. CSC is the largest US based provider of UCC and lien related services, registered agent services, entity, litigation and contract management and we are the largest corporate domain registrar in the world.

So today before we hop into our content, let's talk a little bit about what our agenda is, what we're going to go over. First, we will talk about purchase money and security interest. We had a lot of questions on PMSI and our customers have been asking for some additional assistance. Then we're going to move into talking about fixture filing and filing on fixtures. Finally, we're going to go over some of the pitfalls that could occur after you've already filed and you believe you're perfected. And then at the very end we will open it up to a question and answer session.

So let's turn start off with PMSI or purchase money and security interest. A PMSI is basically a type of security interest that enables those who finance a debtor's acquisition of goods to acquire a first priority security interest in the purchase-money collateral. But even if another creditor has a blanket or earlier perfected security interest a PMSI filing lets you take first position. This is used by sellers of goods to secure prices where a person who advances funds to enable the debtor to acquire rights in goods. So this is like a super priority.

Things I want to talk about . . . what type of secured parties are able to create a purchase-money security interest. So we mentioned a seller of goods. That could be like equipment. A lender that finances the acquisition of goods such as inventory or a consigner of goods. The secured party them self has the burden of establishing the extent to which the security interest is a PMSI. So you have to follow all the correct steps to establish a purchase-money security interest and strict compliance says that that is essential because really . . . you don't really have a perfected security interest until someone has defaulted and at this point you're trying to enforce your rights as a secured party. So you're going to need to be able to show that you've taken all the appropriate steps.

Let's talk a little bit about why you're doing this. It's all about priority. So here's a good example. In 2010 we have a secured party that files a UCC and the collateral is all the assets of the borrower. In 2011 a second secured party files a UCC and the collateral is all equipment. And then in 2012 a third secured party files a UCC but the collateral is very specific. It's a UCC laser widget model 1234. So in the event that the borrower defaults to all these secured parties, this is what's going to happen. Secured party three has first position on their laser widget model 1234. So they're probably getting that back. Secured party one has a priority in all the other assets including equipment and unfortunately secured party two is probably out of luck unless there's additional equipment that did not satisfy secured party one.

So how do we create a purchase-money security interest? Well, it's not really all that different from how you file a regular UCC record. There is no special form. You're still going to use the UCC-1 form. There is no statutory requirement to indicate in the financing statement, like in the collateral box, that this is a purchase-money security interest. And general rules for collateral sufficiency still apply.

What is a little bit different is the deadline for filing. So the PMSI perfection deadline, the general rule of thumb is that the secured party has to perfect the PMSI before or within 20 days of the debtor receiving possession of the collateral. So if I am selling a piece of equipment to somebody and they are financing it, I need to file my UCC on or before 20 days from the date they get that piece of equipment. There are some exceptions to the 20 day rule and we're really going to focus on the top two, on the exception where you have PMSI that is inventory collateral, consignment goods. Those are where most of our clients work. That's what we're going to focus on. But some other exceptions could also be a livestock PMSI or states that have non-uniform amendments to UCC article nine. So they may require different deadline for how many days. And consumer goods as well.

Let's talk about inventory first. When you have inventory as collateral that you would like to create a purchase-money security interest the PMSI must be perfected before the debtor actually gets the inventory collateral. So there is no 20-day rule here. You also have to send a notice to all the other secured parties at record that might have a conflicting security interest that you have a purchase-money security interest in specific inventory collateral. So basically the recipient needs to get the notice before the debtor has the inventory. We'll go through the very specific steps but the notice is like . . . the UCC is going to be good for five years and there are specific contract requirements. For example, the notice does need to be usually on letterhead or with the company logo.

Consignments are not very different from inventory. The consignee has the same rights and then title to the goods identical to those of the consignor. The consigned goods are subject to the claims of creditors and purchasers for value. And again you're going to follow the same process you do with inventory. You're going to perfect the filing before the debtor takes possession of the consigned goods. You do need to send a purchase-money security interest letter out to the other secured parties of record that might have potentially conflicting security interests. And not only that you have to ensure that the notice is received before the debtor actually takes possession of the goods. So it's not good enough to say, "I did a filing. I searched. I found all the other secured parties of record and I sent them all a letter." What article nine says is you actually have to ensure that they received the notice. So it needs to be sent by some sort of trackable mail.

So let's just go over the general guidelines when you're doing PMSI and inventory or consignment goods. So here's sort of what the process is going to look like. The very first thing you're going to do is file the financing statement. After you file the financing statement you will run a search to identify any other secured parties of records that could have potentially conflicting collateral. The search needs to happen after your filing date. So if you file a UCC today it usually takes most states a week, two weeks to get their filing database up to date.

So the filing . . . you need to look at through date at the state. How current is their actual database? And that's when you need to run your search. Once you've done that and you've identified the other secured party, you're going to send them your purchase-money security interest letter and then only after you've confirmed receipt of those letters are you going to actually deliver the inventory collateral or the consignment goods to the debtor.

So for those of you who work with PMSIs or would like more information we have a really nice whitepaper written by our associate general counsel Paul Hodnefield. This is available for download in the resource widget, so you're certainly welcome to download this. It does talk mainly about inventory and consignment goods because that is usually where people experience the most issues. I will say probably that those are the most in-depth type of UCC filings, have the most steps.

We'll give everybody just a minute to download that if they would care to do so and that will remain up through the remainder of the presentation.

Anu: Folks, as Lacey mentioned PMSI whitepaper is available in the resource widget on your console for download. It's a PDF. So you can download that any time throughout the webinar.

Lacey: Thank you Anu. All right. Let's move on to fixture. We get a lot of questions about fixtures. So first I want to address what a fixture actually is and what the general filing guidelines are for fixtures. And then I want to talk about the addendum because I get a lot of questions about filling out the addendum as well. So a fixture is basically goods that are or have become so related to a particular real property that an interest arises in them under real property law. So there's some things to take in consideration when you're determining if something is a fixture and that will be can I remove this from the property, how fixed is it to the actual real property, the real estate, what's the intention of the party, is it meant to be removed? A good example of this is solar panels. So if I'm selling you solar panels or leasing them and you're financing them, if you default, do I really want to come and remove solar panels from your house? I could. It's probably going to leave some holes in your roof. So what is the intent there? And then how essential is the presence of that fixture to the actual functioning of the real property?

I'm going to go ahead and pop up a poll. You can choose one of these, you can choose multiple. Which of the following are fixtures in your best opinion?

Anu: So again, folks, this is a multi-choice, multi-answer poll question so you can select as many as you think apply. Okay, great. Thank you.

Lacey: Thank you. All right. I'm going to pop up the answers. So it looks like everybody thinks solar panels are fixtures. Rain bins, airplane hangars, possibly not as many. Theater chairs. About half of you think theater chairs might be a fixture. And irrigation equipment. And I apologize in advance. This is kind of a trick question and the reason for that is nothing is really a fixture until you're in default and the court determines whether or not it's a fixture.

So the courts have determined at one time or another that all of these things listed here are fixtures. They've also determined at one time or another that some of these things are not fixtures. It's the same exact thing. So the courts determine fixtures on a case by case basis. And that makes it really hard for us as filers to know am I filing correctly, am I filing in the right place, is this a fixture? And so my suggestion would be if there's any question whether or not something is a fixture I would treat it as both a fixture and personal property. And so that kind of now brings up . . . if it's personal property, how am I filing this record? And if it's a fixture, how am I filing this record and where? Let's talk a little bit to that.

There's filing on fixtures and then there's fixture filing. The UCC fixture filings are very specific. They get filed in the county where a mortgage would be recorded on that affected real property. However, if you're going to file on fixtures meaning the collateral includes fixtures but you're treating it as personal property, that filing is done in the centralized filing office in the state in which the debtor is located. So that's your UCC-1, the secretary of state or whatever the state central filing office is. And then just to make it a little tricky we're not going to go too far into this but a mortgage could also potentially cover fixtures. What's sort of important when you're looking at fixture filings and mortgages is what has priority because they're all filed in real estate records whereas filing on fixtures is filed at the state.

So let's talk about what we're going to file and where. We're going to file the UCC-1 form if it's a new fixture filing. For both filing on a fixture at the state or filing a fixture filing at a county. At the county we're also going to need the addendum because it's going to get indexed with real estate records and there's additional information required.

And here's a really good example of what you're going to do if you're in a situation where you aren't sure if this is a fixture filing or you're filing on a fixture. So in this case what I would do . . . if a Delaware corporation, a company that is incorporated in the state of Delaware but the fixtures however are going to be located in a property in Harris County, Texas. So if you're filing on fixtures in the state central filing index, you'll file in the Delaware Secretary of State. So if you're doing a fixture filing, you're going to record that with the Harris County Clerk.

When you file with the clerk or record with a clerk, you're going to need to fill out the addendum. So here is kind of a picture of what the addendum looks like on financing statements. And the first thing you'll see is you need to check off that the financing statement is to be filled in real estate records. The other thing you'll need to indicate is that the financing statement is filed as a fixture filing. So those two boxes are really important. Then of course you'll need to fill in box 15 which is the name and address of the record owner and box 16 is where you would include a legal description of the real estate which you could get from the current deed.

Some states also . . . or counties rather I should say have some additional requirements that are specific to that county. I do know for example all the counties in the state of California to my knowledge require a partial identification number be in there with the legal description. So you do want to be careful when you're filing at different counties because they can have some difference but they all require the actual legal description. We see more filings get rejected at the county for not including a legal description than probably any other type of rejection.

But just to summarize when you're filing on fixtures, again, that's in the central filing office where the debtor's located. When you're filing in the central filing office priority may be subordinated to recorded real estate interests and your UCC is going to be good for five years unless you're filing in Wyoming where UCCs are good for 10 years. That's the only state where that's like that. If you're doing a fixture filing that is going to be recorded usually with like the recorder's office or county clerk. In the real estate record where a mortgage would be recorded on that related real property. And the priority based on file date against those filing on fixtures and recorded real estate, real estate interest. So you could have a fixture filing that has a higher priority than say a mortgage does if it was filed first.

Fixture filing. Any UCC filed at the county are good for five years. We get that question all the time. I've heard UCC county never purge. Well, they don't usually purge. So you might see them but does that mean that they're an active filing? No. They do lapse after five years.

So let's talk a little bit about what happens after you file. So you've done your searches, you've done your filing, you're looking at everything and you're done. But you're not really done because UCCs really should be treated as something that needs active management. Granted you might not have to do anything for four years and six months but there are some potential situations that are going to require your prompt attention. So let's talk a little bit about monitoring your portfolio. There are changes to you debtor's name or status that could impact your filing position. So it is crucial to monitor your filing, not only to prevent filing from lapsing inadvertently, but to be aware of changes to your borrower information that could impact your filing position. So we do some automated alerts when you work with us to help you keep on top of that.

First thing obviously everybody needs if their security agreements go past five years is expiration tracking. So whether you work with CSC in a self-service capacity through our online system, CSC Financial Online or you work with our customer service team, we can absolutely track all of your filings. We don't charge you for expiration tracking in either service. It's just something that becomes available because you did a filing with us. And we can email you up to six months in advance of the filing expiring so that if you would like to create a continuation, you can either create a continuation or email back your representative and let them know that you need to file a continuation and they can help you.

But the most common post-perfection event that requires a prompt response from the secured party is a change to your debtor's name. Unfortunately, when it comes to individual debtors there's not a great way to track that. You're kind of at the mercy of the debtor to let you know that their name has changed. However, when it comes to corporate debtors it's actually much easier because there is a database. You can see that in the secretary of state in the state of incorporation. So I want to look at just a little case study here.

A long time ago there was a company that was called Factory Direct LLC. It was a furniture store and they were purchased by another store and the new owners decided, "This name's not working." And I'm sure they had one of those signs up. It was like, "Moving, liquidating now." That you always see when you drive past furniture stores. They changed the name to Lifestyle Home Furnishing. Well, they didn't tell their bank that they had a name change. And when things went south and they filed bankruptcy and the bank had never amended or filed a new financing statement.

So when the bankruptcy occurred it was determined that the bank's security interest was unperfected four months after the debtor changed their name because they've never updated the financing statement. So like I mentioned we can't help you with individual debtors. There's just not a great way to do that since there's no database. For your corporate debtors we can absolutely monitor them and their state of incorporation and if their name changes, if they fall out of good standing, if they're merged out of existence or dissolved, you get an email with before and after snapshots so you can take a look at it and take the appropriate action on your end to make sure that you stay perfected.

Now we have some other tracking services that I think are useful in very particular situations. The first one is debtor tracking. I find this most useful if you are the type of lender that writes into your security agreement that your borrowers are not to take any additional funding until you're paid back. If that is something your agreement says, I'm sure you're concerned if they do take additional funding and that's what this is for. It will alert you any time there's a UCC filed on your debtor.

So it's going to tell you what type of UCC it was because you may not care about a termination unless the debtor themselves terminated it which we do see occasionally. But it's going to tell you who the secured party is, the filing date, the filing number, if it's an amendment, a continuation, termination, assignment, UCC-1, whatever it might be. You get a nice email alert with links to the results and then it allows you to click the result and actually order copies if you need a copy of one of those filings.

So debtor tracking can be extremely useful. We also provide bankruptcy tracking. And what bankruptcy tracking does is tell you if your debtor filed bankruptcy and this can be used for both consumers and for companies. I find bankruptcy tracking most useful in the event that there's physical collateral that either you don't want to send in the event of a bankruptcy or that you would like to recover in the event of a bankruptcy. So basically we can be bankruptcy track somebody the second that the bankruptcy hits the PACER system. Our system gets an alert. And so within 24 to 48 hours of the bankruptcy occurring, you know about it.

We'll tell you the chapter, we'll give you the option to pull the docket if you want to, but we're a lot faster than those letters that happen at the bankruptcy court. And if you're a manufacturer, a lot of the manufacturers I work with that have long lead times for their big custom pieces of equipment, they will actually begin the bankruptcy track the second they get their purchase order in because they don't want to build this huge piece of custom equipment and ship it out to find out that their debtor filed bankruptcy the day or two before. We also see a lot of inventory bankruptcy tracking. So again physical collaterals that you want to recover. It's usually a good service for that.

So CSC does have quite a few resources out there. I'm sure you've seen the whitepapers and obviously you know about our webinar, but I want to talk to some of the other resources you may not be aware of. So we do offer a service particularly for those of you who might be in highly competitive industries where it's kind of routine practice to run searches by secured party name rather than debtor name with the intent of basically looking at financing statements to solicit your buyers.

If this occurs, we can actually assist you. So we can represent you on the financing statement in the secured party box. This would prevent reverse searching and keep your client list secure. And it has the added benefit that it will centralize any inquiries, legitimate inquiries from your debtors because they're going to call us and we're going to take their name and information and forward it to whomever you said to forward it to and that way we get that information over to the true secured party so they can respond accordingly. It gets to the right person in your organization.

Another resource that we have available some of you may be familiar with, the CSC Blog. It was formerly known as Transaction Watch and about a month ago we switched over to more of a blog format. This is just an informational piece that you can look at or you can sign up to receive notifications when there are changes to legislation, UCC updates, changes to filing fees. When state offices are going to be closed. So it's a good source of information.

The last update pertaining to UCC that I saw was on August 1st, the state of Delaware increased the electronic filing fee from $30 to $50. Unfortunately, you still have to use a service company to do paper filings, which is the only way they are accepted. They are still charging a $100 for paper filing. But there's a lot of good information and content out here on the blog. So of course you'll find whitepapers and webinars and filing guides and all sorts of information that can be useful for you.

So we're going to go ahead and open things up for questions and answers. We had quite a few questions come in during the course of the webinar and we'll try to answer as many as we can. If anyone needs to reach out to me directly, you're certainly welcome to. Both my phone number and email are up on the screen. And with that I will turn it over to Anu, so we can take a look at some of the questions.

Anu: Great. Thank you. So we're also going to put a poll question up on the screen for you. If you'd like to see a demo of our platform or if you'd like information about UCC, you can select how you'd like to be contacted to learn more about these options. And as Lacey mentioned we do have a lot of questions, so we will get into the Q&A shortly. Just want to remind you that you can download a copy of today's material from the resource widget. And now let's get into it. Heather is asking, "What do you suggest if PMSI notice is sent to the address on the UCC and returned as undeliverable?"

Lacey: So if it's returned as undeliverable . . . so using us we will try to deliver it again because it could just be a delivery error. Unfortunately, if it's returned after that we're going to contact you and ask you how you want to proceed. The only way to get the address is to look at the financing statement. So there's not a lot of options out there. But I would definitely keep very good records that it was undeliverable. For sure.

Anu: Thank you. Sandra is asking do the UCC financing statement filed with the state expire in five years?

Lacey: Yeah. So UCC are active for five years in the state and the county. Like I said the only exception to that is the state of Wyoming where they're good for 10 years.

Anu: Holly is asking how much does tracking cost.

Lacey: So it depends. If you're an existing customer, we'd have to look at your price plan but I can tell you it would never cost more than $6 per name that you want to track and that is a one-time fee. We will basically track those people forever until you tell us to quit. Also the only exception to that is in Delaware. Delaware is super expensive as everybody knows and so in Delaware that $6 is an annual fee.

Anu: I'm going to ask the rest of Holly's questions too. So you had mentioned earlier that you can do alerts to new filings behind yours. How much is that?

Lacey: Sure. So that's debtor tracking and again if you're an existing customer, we'd want to check your price plan. But the normal price for that . . . it would not be any more than $6 and again that is a one-time fee. So we would track that pretty much forever on the same $6 regardless of what state it is. But it is by state. So you tell the debtor's name and the state you'd like us to track in. UCCs should always be filed in the state of incorporation or if it's an individual where they principally reside and then we basically monitor and return an email back to you whenever a new filing pops up. We can also set that up to weekly monitoring if you would prefer to get it weekly.

Anu: And Holly's last question. You had also mentioned how you can click corporate and type name to see like various state results in order to find primary state for parent company. Could you repeat how you did that again?

Lacey: So you can select corporate tracking when you're in a financing statement and you can tie the tracking to that particular financing statement. And what's nice about that is it has to do a baseline search to make sure that that entity is a registered organization in that state. Now you've already selected the state when you do that. So it's really just going to go out and search that one state and it's going to try to locate them as a registered organization. If they're not a registered organization at a state, you're going to get a little message that pops up and says, "No records were found." If they're domestic in another state but they're registered as a foreign entity in that state it will pop up and it will tell you the company's exact name in that state according to the secretary of state website. It will tell you their status in that state, whether they're in good standing or revoked, and then it will also tell you if they're domestic or if they're foreign, and if they are foreign, it will put like in parenthesis the actual domestic state so you know where you need to file at.

The system itself does also have a corporate name verification functionality. So if you would like to verify the name you can do that either from filing center or from the search center if you want to do it well before a filing.

Anu: Great. Thank you. Anne is asking did you say that Delaware only accepts paper UCC filings so that you cannot file online?

Lacey: No. Delaware's actually the reverse. They only accept electronic filing unless you're a service company. So service companies like CSC, we tend to still do paper filings with the state of Delaware. They don't really want to accept paper filings. When we do it it's either because we've been given an attorney prepared filing and we don't like to re-key information or it's because there's an issue with the Delaware e-filing system.

There are a couple of common issues with Delaware e-filing where if you have any special characters for examples in a secured parties' name and you e-file your actual financing statement . . . if you searched in the public record that box will just be blank. So you will have a filing, you'll see the debtor's name, you'll see the collateral with the secured party if they had a special character like an accent mark. Their name comes up blank. In those circumstances we absolutely paper file because we don't want your filing to have a blank name.

They also have some pretty strict limitations on the secured party docs for how many characters you can have when you're e-filing and that's been known to cause some people some issues too and that's why they still have paper filing in the event that you run into one of those issues. But ultimately I think the state of Delaware would like to be 100% electronic. So the only people who can paper file in Delaware are service companies like a CSC but we try to avoid it whenever possible because it's going to double the cost of your filing.

Anu: Great. Thank you. Joe is asking how do you track the debtor's customers.

Lacey: How do you track debtor's customers? So this comes back to reverse searching. If I had a competitor and I knew what name they put on their financing statement, I could go out to several of the states' state databases and I could run a search by the secured party name rather than by the debtor name and it's going to work just like a debtor search. It's going to pull up all the filings that contain that name. So in this case it's going to pull up a secured party's complete active filing . . . I mean, I could include lapse in some states as well that they have filed with that state.

And then I could pop that into a spreadsheet or word and I have your client's names and addresses at that point because they're on the debtor box for the UCC. That's a problem. Not everybody experiences this issue. It's really super competitive industries that tend to have this problem where competitors do reverse search on their secured party name with the intent of basically using the public record for marketing material. So again that would be usually companies like merchant cash advance companies, factoring companies, we see it a lot with equipment, finance. They'll go in and they'll say, "Oh, I know my competitor has a three-year lease so I want to see all the UCCs that are under three years old." So we do see that quite frequently. Not all states offer a search by secured party option but enough do to make it problematic.

Anu: Thank you. Laura is asking how does secured party representation work.

Lacey: So secured party representation is basically us representing you in the secured party box on your financing statement. And that's exactly how it works. The rest of your filing proceeds as normal. Our information would pre-fill into the secured party box preventing that type of reverse searching and then if a debtor did have an inquiry, we would forward it to whomever the true secured party of record is.

Anu: Great. Rob is asking does your system have an easy way to file both at state and the county without having to create two filings?

Lacey: Actually it does. That's a great question, Rob. So the way you would do that is you would actually create a filing within our CSC Financial Online Portal if you're working online with us, which I think many people on this webinar are. And when you get to the very last screen of our system, it's going to give you an option to duplicate the filing. So when you work with us online there's two steps for filing. There's filing creation and then there's approving the filing to tell us it's okay to go ahead and file it. We e-file whenever it's humanly possible so you definitely want it to stop before it just comes through for filing because once it goes through for filing, it's kind of instantaneous back out to the state.

So there's a little button on that screen when you can look at your filing and see what you created. It gives you the options duplicate the filing and when you click on it you can say, "Use all the same information but change the jurisdiction to this county." And then it won't make you create the addendum. It's a really nice feature. I have to admit I like to use as little keystrokes as possible so I usually do the county filing first and then duplicate to the state and just check to leave off the addendum since it's not necessary there.

Anu: Great. Thank you. Abbie's asking, "If my company wants to use CSC how much does it cost to get my UCC portfolio set up?"

Lacey: So there's no cost to work with us, to set up access. If you want to work with us at customer service, you just let us know and we will have a customer service person and their backup assigned to work with you so that you can work with the same person over and over again that knows how you like things done. If you're a larger filer, I highly recommend using our online portal, CSC Financial Online because it's going to treat your UCCs as a portfolio rather than a filing we got from point A to point B.

And this is a good time to mention that with the exception of expiration tracking, debtor tracking, corporate tracking, and bankruptcy tracking as well as secured party representation are only available through our online portal. But with that, you basically tell us you want to use it. There's no cost to get set up, there's no cost to import your existing portfolio. If you're doing large volume filings and you would like to integrate with us so you don't actually have to log into the filing portal to submit filing, we can do that. There's no cost for that. Everything in the online portal is a la carte, so you just pick and choose the services you want to use and that's all we bill you for that and whatever jurisdictional fees we're advancing when you do your filing.

Anu: Thank you. Percy, is asking is your portal compliant in all jurisdictions that arise in article nine?

Lacey: Yeah. So when you're using our portal we will basically fill in like a template for information and the system will take that information and populate it into the correct UCC-1 form or UCC-3 form. All states now with the exception of New York I believe will take the UCC-1, the national form. However, there are states like Florida and Illinois. They like their forms better and we will use whatever the preferred form is because it will lessen the chance that your filing gets rejected. And I can mention, Anu, last year we had six and a half million filings run through the system and the rejection rate on the online portal was less than .10 of 1%.

Anu: That's amazing.

Lacey: Yeah.

Anu: Nice. Linda just wrote in, "Do your fixture filings fully expire?"

Lacey: Yeah. So we get this question on almost every webinar that we have about filing at the county. Fixture filings are good for five years just like a regular UCC filed at the secretary of state. The difference is that most states will purge their UCC records once the filing is terminated or has lapsed. They purge their records about 6 to 12 months on average after that occurs. Counties however don't purge their records so you could absolutely see an old UCC filing at the county but that doesn't make it active.

Anu: Thank you. Josh is asking, "Are serial numbers required for PMSI filing?"

Lacey: I wouldn't say they're required. So what article nine says about collateral sufficiency is just that you have to sufficiently describe the collateral. Now my personal opinion is that if your collateral is the actual piece of equipment, especially in the case of a purchase-money security interest, more is more and you can't really over describe it. I would include make, model and serial number personally because you don't want there to be any questions of what the collateral is in your agreement. So I would recommend if there's a serial number or a maker model I would put it in there.

Anu: Let's get one more question in Karen wrote in. Is the CSC UCC filing service fee charged when used or do we have to subscribe to CSC for the service?

Lacey: That's a good question, Karen. No. All of our services whether you work through customer service or you work through our online portal are all transactional. So we don't charge you like a subscription or anything like that. We're only going to bill you when you've actually used the service. The one difference, because I see you're with a law firm that I want to mention is if you're working with customer service they will send you your invoice with your filing acknowledgement, so the copy of the UCC you get back once you're filed.

In CSC Financial Online because these are usually higher volume filers, we only invoice once a month because it's not terribly efficient to . . . if someone files a 100 UCCs we send them a 100 invoices in the same month. But I know law firms tend to work project based. So we do have several law firms that do work in the CSC Financial Online Portal and what we do normally is set up a billing reference field for your matter number, so that when we send the monthly invoice we could actually filter it by your client name or your matter number and subtotal it out and put them on separate pages. So if you used it for multiple clients, no one can see what work you did it on for anyone else. You could just extract that one page of the invoice.

So if you do have questions about that, let us know. We are currently piloting a brand new online portal for UCC in due diligence that will be solely geared towards law firms because it's going to be all project based. I don't think that will roll out until sometime late at the end of first quarter 2018.

Anu: Great. So folks that is all the time we have today. If we didn't get to your question, we will contact you with a response after the webinar. Thank you, Lacey, for the information. This is great. And thank you to everyone who joined us. We hope to see you next time