If your company loans money to individuals or other companies, you will likely have to draft a financing agreement and file a UCC-1 financing statement at some point to protect your rights in any collateral or security used as the basis for the loan. A sound financing agreement and UCC-1 financing statement are of critical importance to any company that offers secured loans. This article focuses on the UCC-1 filing.
The process of filing a UCC-1 financial statement can be confusing. Before you file your UCC-1 financial statement, contact a paralegal who specializes in corporate and commercial issues to walk you through the steps of this process and answer any questions you have about it.
The Uniform Commercial Code
The Uniform Commercial Code (UCC) is one of the uniform acts that have been written and enacted in an effort to standardize laws from state to state. This code, first published in 1952, was created to regulate and update the laws regarding sales and other commercial transactions in the United States.
What is a UCC-1 Financing Statement?
A UCC-1 financing statement is a legal form that is used by a creditor to inform a debtor that he or she has a financial interest in the debtor’s personal property.
These forms are filed to “perfect” creditors’ security interests by providing public notice of their right to take possession of certain assets belonging to their debtors in order to satisfy specific debts. This process is known as perfecting the security interest as part of a secured loan using the property as collateral. These forms are generally made available to the public through newspapers.
To be a valid UCC-1 financing form, a document must contain the following three pieces of information:
- The name and address of the debtor;
- The name and address of the creditor; and
- The collateral. This can be a detailed description of the property or a more general summary of its contents.
When a UCC-1 financing statement is filed, it communicates to other prospective lenders or buyers of the property that there is a lien over the property.
How to File a UCC-1 Financing Statement
A UCC-1 financing statement generally needs to be filed with the State Secretary of State in the debtor’s home state unless the collateral is tied to any piece of real property. This can mean that the collateral is anything from lighting fixtures within a building to the mineral rights on a section of land. When this is the case, the form should be filed with the county where the property is located.
UCC-1 forms can be downloaded from the state government website of the state where you plan to file the form. The form must then be filled out completely and returned to the State Secretary of State’s office. In some states, there is a separate office within the Secretary of State office devoted only to handling this type of documentation.
Virtual Paralegal Services that Fit Your Needs
Let us help you through the process of filing a UCC-1 financing statement. At Virtual Paralegal Services, we provide on-the-spot legal help to your company and can give you the guidance and advice you need to successfully file any type of legal document. Contact us today to begin working with Virtual Paralegal Services.