A UCC lien benefits the lender by establishing “priority in case of debtor default or bankruptcy.” (California Secretary of State). Once the loan is satisfied, it falls to the borrower to request that the lender notify the Secretary of State, by filing to terminate the lien.

Does a UCC filing expire?

A UCC-1 financing statement will automatically expire five years after the date of its filing [2].

What is a UCC-1 form used for?

A UCC-Uniform Commercial Code-1 statement is a legal notice filed by creditors in an effort to publicly declare their right to seize assets of debtors who default on loans.

What does UCC 3 cover?

Under Article 9 of the Uniform Commercial Code (“UCC”), a UCC-3 is defined as a filing used to make or track any changes to a UCC-1 filing, including continuations, terminations, transfers, and amendments to party names and collateral.

What is a UCC filing and what does it mean?

A UCC filing is a public notice that identifies that you have an outstanding debt obligation. Most lenders (particularly online lenders) use this to secure a business loan. It’s sometimes called a UCC lien, or general lien, on business assets.

When to file a continuation statement for UCC?

However, if a loan extends beyond that period, a lender normally files a “Continuation Statement” renewing the original UCC-1 filing for another 5 years. Sometimes a lender will renew their UCC-1 filing if they make a new loan to a business before the five years is up. The new loan causes the clock to start running its 5 years again.

When do you have to renew your UCC-1 filing?

However, if a loan extends beyond that period, a lender normally files a “Continuation Statement” renewing the original UCC-1 filing for another 5 years. Sometimes a lender will renew their UCC-1 filing if they make a new loan to a business before the five years is up.

What’s the difference between a UCC 1 and UCC 3?

UCC-1 is a standard UCC lien. Every new UCC lien is UCC-1 and stays that way until there is a change with the lien. A UCC-1 becomes a UCC-3 if there is any kind of amendment to that original UCC filing. Such changes include: We’ll touch on UCC-3 filings more, later as they play an important role in helping you removing UCC filings.