A Secured Party must file their UCC1 Financing Statement quickly and correctly In order to perfect their security interest. Inaccurate, incomplete or untimely filings can prove costly for lenders as they open the door for secondary parties to claim a priority position.
1. Failing to file under the exact legal name
A UCC filing must properly identify the debtor to effectively perfect a security interest. To satisfy this requirement, it is critical to use the debtor’s exact legal name on your UCC1 Financing Statement.
For a business name that means the name is it appears on their formal organizing paperwork such as articles of incorporation/organization or partnership agreement.
Determining the exact legal name for an individual can be difficult. In most cases it will be the name on a person’s driver license or state-issued identification card, but it is a good to check the specific state UCC filing rules before filing on individual names to guarantee compliance.
2. Including “dba” notation as part of a debtor name
Examples: Debtor: John Smith dba ABC Trucking or ABC Trucking, Inc. dba Truck World
Secured parties will sometimes include a “dba” name as shown above in an attempt to more clearly identify their debtor. By structuring their debtor names in this way; secured parties are actually failing to file under the exact legal name. A better choice would be to add the tradename as an additional debtor, omitting the “dba” tag from the name.
3. Filing document in the incorrect filing office
Revised Article 9 established that UCCs are filed based on the location of debtor NOT the location of the collateral. Here is an overview:
- Registered Business: file in their home/domicile state
- Unregistered Business: file in the state where they have their chief executive officer
- Individuals: file in their state of residence
4. Missing attachment pages
If your Financing Statement requires attachment pages to list out specific collateral, make sure to carefully review all pages of the attachment before submitting the document for filing. Missing attachment pages can cause a UCC to inadequately describe the collateral, which could prove very dangerous in the event of a competing claim.
5. Incorrect filing fee
One of the primary duties of the filing officer is to ensure that proper payment is remitted. A document that is presented for filing with the incorrect filing fee will be rejected.
To guard against damaging filing mistakes, consider working with a service provider that performs a thorough quality review of your documents prior to submission. A well-trained eye can catch many of these before it’s too late!