First Corporate Solutions Blog | UCC, Corporate, Lien, Litigation, Title | Search, Filing, Monitoring » Lien Monitoring

Tips For Improving Turn-Around Time for Lien Searches: Part Two

First Corporate Solutions Team — Tue, 24 Jan 2012 19:25:18 +0000

Having a rapid turn-around time for your pre-funding lien searches is important. Borrowers are looking for quick funding solutions and slow turn-around time for lien searches can extend your funding cycle, frustrating prospective clients and tarnishing your reputation in the industry. Earlier this month, First Corporate Solutions began a four-part blog series devoted to providing our readers with tips for improving the turn-around time for lien searches.

This Week’s Tip: Provide as Much Information as Possible to your Searcher for Offline Searches

In Part One of this series, we discussed online searching as a method for improving the turn-around time for state-level lien searches. While online searching at the state level is often a good choice for improving turn-around time, online resources are not the best choice for every type of search. Always remember to find out the source of the data prior to using any private online search system as third party data can include typographical and other data entry errors that jeopardize the integrity of your search result.

In addition, county-level lien searches on private search systems can also be unreliable due to irregular data collection practices and through date concerns. Therefore, some searches efforts are best completed as a manual (offline) search requests placed with your preferred vendor. In these cases, be sure to provide as much information as possible when initiating your search request. Here’s why.

When you place a search request with a vendor, the searcher scours the index for liens that match the basic target name you’ve provided, then eliminates all records they can based on a variety of criteria such as lapse dates, middle initials, social security numbers, etc. Any lien that cannot be eliminated is reported to you as a finding. Sorting through the initial search results takes time, particularly for common names or those with a lot of filing activity. If you have a middle initial or social security number for an individual, provide that when placing your order to speed up the elimination process. Please note, many filing offices are now redacting social security numbers from filings due to privacy concerns, but others still keep the last four digits on documents to help identify debtors.

Check back next week for another Tip for Improving Turn Around Time for Lien Searches!

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Tax Lien Searching Blog Series Part Two: Ordering a Tax Lien Search

First Corporate Solutions Team — Fri, 22 Oct 2010 06:10:26 +0000

In last week’s blog post we discussed the importance of searching tax lien records as part of your pre-funding due diligence search efforts. This week, we’ll go over a few tips for ordering tax lien searches to achieve the best results.

There are three important things to keep in mind when searching for tax liens. The first is the scope of the search. Most tax liens are effective for a period of ten years and can be renewed. So you will want to instruct your searcher to perform a ten year search, minimum, of the tax lien records to ensure all active liens would be picked up.

Secondly, tax lien filers are not held to the same strict standard as a UCC filer with regard to debtor names. UCC filers must list the exact legal name of their debtor in order to ensure the effectiveness of their filing, but there is no such requirement for a government agency filing a notice of tax lien. Confirm with your searcher that they will report tax liens on similar names in case a notice was filed under a name variation for your applicant.

Lastly, you will want to be sure to search the correct filing office. Depending on the jurisdiction, tax liens could be filed at either the state filing office (e.g. Secretary of State) or a local filing office (County Recorder, Register of Deeds etc.) where the taxpayer resides. Work with your searcher to determine where tax liens are filed in your search jurisdiction and order your search accordingly. In those states where tax liens could be filed at either the state or county, remember that an exhaustive search would include a search of both the state and county filing offices.

Check back next week for Part Three: Reviewing Tax Lien Search Results!

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Tax Lien Searching Blog Series Part One: Why You Should be Searching For Tax Liens

First Corporate Solutions Team — Fri, 15 Oct 2010 18:42:38 +0000

First Corporate Solutions is launching a 3-part blog series on tax lien searching! This week’s post discusses why you should be searching for tax liens. Here is a schedule for upcoming topics on tax lien searching:

Friday 10/22: Ordering a Tax Lien Search
Tips on how to order your tax lien search to achieve the best results.

Friday 10/29: Reviewing Tax Lien Search Results
Expert advice on how to review and interpret your tax lien search results.

When performing pre-funding public records research to help determine an applicant’s outstanding obligations and gauge their ability to repay debts, it is important to include a search for existing tax liens. Tax lien searches are recommended for a couple of reasons:

1. Tax liens are a factor in determining the priority of claims. Just like a UCC Financing Statement, a tax lien has priority relative to other liens, based on its date of filing. An existing tax lien could jeopardize a lender’s ability to collect on a bad debt.

2. Tax liens are involuntary in nature so a taxpayer may not even be aware they have a lien filed against them. In these cases, a tax lien search may be the only way to find out about a lien before advancing funds.

You will need to have an understanding of how to order the search to get the desired results and how to review the search results once returned from your vendor. Check back each Friday this month for more tips and tricks on tax lien searching!

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Lien Monitoring Programs: What Liens To Search For

First Corporate Solutions Team — Fri, 13 Aug 2010 23:04:06 +0000

Once a creditor has filed their UCC Financing Statement they’ll likely want to do all they can to maintain their priority position throughout the life of the loan. Lien-monitoring programs offer a great way for a secured party to keep a watchful eye on other lien-holder activity against their debtor.

The concept behind lien-monitoring is that the sooner a creditor knows about a lien, the sooner they can act to protect their interests. These programs run interval searches on debtor names to check for any new filing activity and then provide timely updates to alert a creditor to potential threats. What follows is an overview of items creditors tend to include in their monitoring efforts.

Federal Tax Liens

Many people consider Federal Tax Liens the most urgent of all liens because, in some cases, they can prime a perfected UCC. For asset-based lenders in particular, it is critical to know about a Federal Tax Lien as soon as possible as there is only a 45 day window after filing of the tax lien where the UCC will provide a creditor with priority protection for newly made advances or taxpayer receivables.

UCC3 Change Statements

Monitoring debtor names for UCC3 change statement is important for two reasons. First, it may reveal that another creditor has amended the debtor name or address on their filing, alerting you to a change that may need to be made on your own filing. And secondly, a creditor can watch to see if any unauthorized changes are being made to their own UCC, such as a fraudulent termination.

State Tax Liens and Judgment Liens

Many secured parties also elect to monitor for State Tax Liens and Judgment Liens. For State Tax Liens, a lender would want to know right away if their borrower is failing to pay their taxes as it could be an indication of financial distress. Furthermore, in some states, in certain situations a State Tax Lien can prime a UCC much like a Federal Tax Lien. With Judgment Liens, they may not have the ability to trump your filed UCC, but they certainly are a good indicator of character.

New UCC Financing Statements

Lastly, creditors often monitor for new UCC Financing Statements to learn of any new junior creditors. Most standard security agreements have restrictions on the other kinds of financial arrangements a borrower can enter into. A newly made UCC Financing Statement could represent the breaking of a covenant.

If you decide to begin monitoring your accounts, be sure to do some solid research up front. And remember, liens can be filed at either the state or county level. For the most comprehensive coverage, look to a service that searches both state and county filing offices.

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FAQ Series #4: How can I reduce my costs for lien searches?

First Corporate Solutions Team — Thu, 15 Apr 2010 23:35:28 +0000

Last week’s blog post offers some practical ideas of ways secured parties can reduce their UCC filing costs. Continuing the conversation on ways to make cuts from due diligence spending without increasing risk, this week we will answer question, “How can I reduce my costs for lien searching?”

Self-search

Much of the price associated with lien searching is the cost of labor. Working with an offline service provider can inflate due diligence invoices because you are paying a premium for the service company’s time, energy and resources to perform your search. To drive down costs, try working with a UCC provider that offers a web-based search system. The fees for self-searching on a privately maintained online system are often much lower than those incurred for a comparable offline search.

Take advantage of broad-based name searching

Another advantage of using an online UCC search system is that many incorporate broad-based searching features. This means that the system will allow users to input a truncated search name and/or wildcard characters in order to reveal name variations. Broad-based name searching can reduce search costs by combining associated names of interest onto a single search report rather than paying separately for each. If you decide to use an online search system, make sure to take advantage of its broad-based name searching capabilities.

Be mindful of copy costs

Most public record search companies charge a per page fee for copies of lien documents that accompany your search report. Active names can generate hundreds of dollars in copies that may not even be relevant to your deal. In cases where your search name is common or you anticipate a large number of hits, you may want to order a “listing only” search to start. Then you can review the report and order copies of only those documents that are pertinent to your transaction.

Monitor for liens

If you run periodic searches on your accounts to watch for changes that may impact their ability to repay debts, consider using a lien-monitoring service instead. Account monitoring providers will perform interval searches of your account names and promptly alert you to any new filings or changes to existing obligations. Monitoring services cost only a few dollars each month and offer an inexpensive and convenient way to stay informed.

Be sure to check back next week for the final post in our FAQ blog series!

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Tips for Tackling Fraudulently Filed Termination Statements

First Corporate Solutions Team — Fri, 05 Jun 2009 19:32:53 +0000

So, you just discovered that your UCC Financing Statement has been fraudulently terminated by the debtor. You are likely wondering what comes next. Is there anything you can do to reassert your priority position and minimize your risk? Don’t panic, there are several ways you can address the situation. Here are a few options you may want to explore:

Do nothing
There are only a few instances where a debtor-authorized termination is effective under Article 9 of the Uniform Commercial Code. As the Secured Party of record, if you did not grant authority to the debtor or fail to file a termination statement after satisfaction of the debt, the termination statement is likely ineffective. If the termination statement is ineffective, no further action may be required on our part to maintain your secured position.

File a Correction Statement
Upon discovery of a fraudulent termination, some Secured Parties are opting to file a correction statement with the filing office. Although the code only authorizes debtors to file correction statements, since they have no legal affect on the effectiveness of the filing, Secured Parties are using them as a means to note in the public record that the termination was filed without proper authorization.

File a new UCC1
Other Secured Parties have elected to address the termination by filing a new UCC1 Financing Statement, noting in the collateral description that their previous filing was fraudulently terminated.

Lien Monitoring
Lastly, consider taking advantage of a monthly lien monitoring program that will screen your accounts regularly and alert you to any critical filings that may jeopardize your priority position to collect on debts.

Be sure to review the code carefully and speak with your legal counsel when determining your best course of action.

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