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UCC Lien Basics: Everything You Need to Know

Filing a UCC lien can be confusing. This article aims to break it down into simple steps so anyone can understand the basics. I’ll explain what a UCC lien is, when to use one, how to file, and what to do after.

What is a UCC Lien?

A UCC lien allows a creditor to stake a claim on a debtor’s personal property as collateral for a loan or obligation. It’s kind of like putting a temporary mortgage on someone’s stuff until they pay you back what they owe you.

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UCC stands for Uniform Commercial Code, which is a set of state laws about commercial transactions including secured loans and sales of goods. All 50 states have adopted some version of the UCC .

When Do You Need a UCC Lien?

Common reasons to file a UCC lien include:

  • You loaned money to a business and want to claim their assets if they default
  • You’re selling goods to a business and want to secure payment
  • You have a court judgment against someone and need to collect

For individuals and consumer goods, you may want to consider a security agreement instead. But for commercial transactions, UCC liens are handy.

How to File a UCC Lien

Filing a UCC lien is easier than you’d think!

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  1. Fill out a UCC-1 form with info about you (the creditor) and the debtor.
  2. Describe the collateral (which of their property you have a claim over)
  3. File with the Secretary of State in the debtor’s state along with a small fee.
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Requirements vary a bit by state. So read the instructions carefully!

For example, California makes you mail a courtesy copy to the debtor after filing. And Florida needs you to file county-level too .

After Filing: Amendments and Renewal

Initial UCC liens generally expire after 5 years. You’ll then have to file a continuation if still unpaid. Most states let you file a continuation up to 6 months before expiration.

You may also need or want to make amendments, for example if:

  • The debtor moved collateral to a new location
  • Your or the debtor’s address changed
  • You made changes to the loan terms

Amendments continue the expiration date. So you don’t need a separate continuation after an amendment. Easy peasy!

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Enforcing a UCC Lien

If the debtor defaults, you can enforce the lien to take possession and sell the collateral. But first you must send a notice giving them right to cure the default.

If they don’t pay up, consult a lawyer about next steps. Usually you arrange repossession through lawful means only. Then sell the goods and apply proceeds to the unpaid debt.

Breach of peace violations can lead to damages against you. So no unlawful entry or threats! Handle enforcement properly with counsel.

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Defenses Against UCC Liens

On the flip side, if someone files a bogus lien against you, don’t panic! There are defenses.

For example, you can file an affidavit claiming it’s unauthorized. Or sue to discharge if you already paid them.

If the lien is fraudulent or abusive, you can sue for damages too. Especially if they won’t release after you demand it.

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Every state has laws against fraudulent liens . So don’t let scammers push you around!

The Takeaway

UCC liens seem complicated but boil down to 4 key steps:

  1. Fill out UCC-1 form with creditor/debtor info
  2. Describe collateral to claim
  3. File with Secretary of State + fee
  4. Follow up if needed down the road

Know your rights and options if a lien is filed against you too! With this foundation, you can handle UCC liens with confidence.


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