Expert Tips on Lien Monitoring Programs
The concept behind lien monitoring programs is that the sooner a creditor knows about a lien, the sooner they can act to protect their interests. These programs run updated interval searches on debtor names to check for any new filing activity, and then provide timely alerts to a creditor regarding potential threats. What follows is an overview of the various lien types creditors tend to include in their monitoring efforts.
Federal Tax Liens
Many creditors consider a Federal Tax Lien the most urgent of all liens because in some cases one can even prime a perfected UCC. For factors and asset-based lenders, it is critical to know about a Notice of Federal Tax Lien as soon as possible, so they can act within the 45-day window in which the UCC continues to provide priority protection.
UCC3 Change Statements
monitoring debtor names for UCC3 change statements can reveal if another creditor has amended the debtor name or address on their filing, alerting other creditors to a change that may be needed on their own filing. Additionally, a creditor can watch to see if any changes have been made to their own UCC, such as an unauthorized termination.
State Tax Liens and Judgment Liens
Many secured parties also insist on monitoring for State Tax Liens and Judgment Liens. For State Tax Liens, being alerted right away if their borrower is failing to pay their taxes is vital as it could be an indication of financial distress, and Judgment Liens can be a good indicator of character among other things.
New UCC Financing Statements
Lastly, creditors often monitor for new UCC Financing Statements to learn of any new junior creditors. Most standard security agreements include restrictions with regards to other financial arrangements into which a borrower can enter. A newly made UCC Financing Statement could represent the breaking of a covenant.
First Corporate Solutions’ Account Monitoring program includes expert searches of both the state and county filing office records for your complete coverage and peace of mind. Contact us today at 800.406.1577 or visit our website here for more information.
Remember, liens can be filed at either the state or county level. For the most comprehensive coverage, look for a monitoring service that includes searches at both state and county filing offices.
– First Corporate Solutions Account Manager
Affordable litigation and bankruptcy monitoring services are also available for early notification of pending legal action.
– B. Hyde, Attorney Sacramento, CA
We found that updated searching through a formal lien-monitoring program is more cost effective than requesting regular audits of our portfolio or performing recurring searches.
– M. Perez, Portfolio Manager Springfield, IL