A creditor must file their UCC1 Financing Statement quickly and correctly In order to perfect their security interest. Rejected UCC filings can prove costly for lenders as they open the door for secondary parties to claim a priority position. In this blog post, we offer a few tips to avoid rejection of your UCC documents.
In truth, there are not many errors you can make that will cause a filing officer to reject a UCC document. For the filing officer to accept a UCC for filing, the document must meet a set of minimum requirements. These requirements vary a little from state to state, but in many cases, all a filing has to do is include a debtor name and address, a secured party name and address and a collateral statement. If a UCC document meets the minimum requirements and the correct filing fee accompanies the document, the Uniform Commercial Code directs the filing officer to accept the document into the public record.
Here are a few simple steps you can take to reduce your number of rejected UCC filings:
- Forward the right payment for your UCC filing. When in doubt, you can always check the state’s website for information on filing fees. Remember, you may encounter additional charges for multiple debtors, attachment pages or the use of a non-standard form.
- Make sure the document is legible. Keep in mind that the definition of a legible document is evolving as technology advances. Presently, most states will reject a document that, while legible in hard copy form, will not scan well into their electronic database.
- Complete all of the necessary fields on the form for your specific type of transaction.
- For UCC3 filings, make sure you include the correct UCC1 filing number on the document. The filing office will likely reject a UCC3 that lists a number that does not match any of their active records.
- Keep a close watch on your UCC lapse dates and submit your continuation statements within the 6-month window; continuations that are submitted too early will be rejected by the filing office.
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