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UCC Filing

Uniform Commercial Code

a collection of standardized laws on the contracting and trade of goods that has been adopted by the majority of states in the U.S. A UCC lien usually results when an entity lends money to a debtor, and the debtor pledges collateral to the lender in exchange for the loan.

Maintains the secured party’s claim to the collateral.
Protects against potential loss of priority if the original filing lapses.

Renewal

To maintain the priority of the security interest beyond the original filing period (usually five years). A UCC-3 form is filed for the renewal. The renewal must be filed before the expiration of the original financing statement to avoid lapsing.

Terminations

If the financing statement is not renewed by the filing of a UCC renewal, the statement lapses and the lien becomes unperfected. This means that the lien may not be recognized if challenged in court by another lienholder or creditor of the small business. The lender must also file a UCC termination statement if the loan is paid in full. The termination statement gives notice that the lien is no longer effective.