UCC-1 financing statement
Encyclopedia
A UCC-1 financing statement (an abbreviation for Uniform Commercial Code
-1) is a legal form that a creditor
files to give notice that it has an interest in the personal property of a debtor
(a person who has owes a debt to the creditor as typically specified in the agreement creating the debt). This form is filed in order to "perfect" a creditor's security interest
by giving public notice that there is an ability to take possession of certain assets for repayment of a specific debt. Such notices are often found in the local newspapers. Once the form has been filed the creditor may move forward in the process of appropriating perfected assets of a debtor that are of equal value to the debt owed. This process is also called "perfecting the security interest" in the property, and this type of loan is a secured loan
.
Pursuant to the standards set forth in the UCC, the financing statement need only contain three pieces of information:
The financing statement is generally filed with the office of the state secretary of state, in the state where the debtor is located - for an individual, the state where the debtor resides, for a business organization the state of incorporation or organization. Many states have a state agency which operates under the secretary of state, and which is tasked with overseeing business organizations and activities, including receipt of financing statements. However, an exception exists if the collateral is something that is tied to a particular piece of real property
, such as timber
, mineral rights
, or fixtures. In that case, the filing must be made in the county where the property is located, usually in the recording office or county court, because that is where third parties are most likely to search for such records.
The filing creates a lien
against the property, so the borrower may not dispose of the property without paying off the debt.
Uniform Commercial Code
The Uniform Commercial Code , first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America.The goal of harmonizing state law is...
-1) is a legal form that a creditor
Creditor
A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...
files to give notice that it has an interest in the personal property of a debtor
Debtor
A debtor is an entity that owes a debt to someone else. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor...
(a person who has owes a debt to the creditor as typically specified in the agreement creating the debt). This form is filed in order to "perfect" a creditor's security interest
Security interest
A security interest is a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a debt. It gives the beneficiary of the security interest certain preferential rights in the disposition of secured assets...
by giving public notice that there is an ability to take possession of certain assets for repayment of a specific debt. Such notices are often found in the local newspapers. Once the form has been filed the creditor may move forward in the process of appropriating perfected assets of a debtor that are of equal value to the debt owed. This process is also called "perfecting the security interest" in the property, and this type of loan is a secured loan
Secured loan
A secured loan is a loan in which the borrower pledges some asset as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan...
.
Pursuant to the standards set forth in the UCC, the financing statement need only contain three pieces of information:
- the debtor's name and address
- the creditor's name and address
- a description of the collateral, which may be very general
The financing statement is generally filed with the office of the state secretary of state, in the state where the debtor is located - for an individual, the state where the debtor resides, for a business organization the state of incorporation or organization. Many states have a state agency which operates under the secretary of state, and which is tasked with overseeing business organizations and activities, including receipt of financing statements. However, an exception exists if the collateral is something that is tied to a particular piece of real property
Real property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
, such as timber
Timber
Timber may refer to:* Timber, a term common in the United Kingdom and Australia for wood materials * Timber, Oregon, an unincorporated community in the U.S...
, mineral rights
Mineral rights
- Mineral estate :Ownership of mineral rights is an estate in real property. Technically it is known as a mineral estate and often referred to as mineral rights...
, or fixtures. In that case, the filing must be made in the county where the property is located, usually in the recording office or county court, because that is where third parties are most likely to search for such records.
The filing creates a lien
Lien
In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation...
against the property, so the borrower may not dispose of the property without paying off the debt.