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Using UCC-3 Forms to Amend, Assign, or Terminate Lien Filings

UCC-3 forms can be confusing. But they are an important part of secured transactions law. This article will explain what they are, when to use them, how to fill them out, common mistakes, and more. My goal is to make this clear and helpful for regular folks trying to understand this stuff.

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What is a UCC-3 Form?

A UCC-3 form is used to make changes to an existing UCC-1 financing statement. The UCC-1 sets up the original security interest or lien filing. The UCC-3 makes amendments, assignments, continuations, or terminations to that original lien filing.

For example, let’s say Bank A loans money to Company B. Bank A files a UCC-1 to secure their loan to Company B with a lien on certain assets. Later, Bank A assigns the loan to Bank C. Bank C would file a UCC-3 to show the assignment of security interest from Bank A to themselves.

When Do You Need to File a UCC-3 Form?

Here are some common situations when a UCC-3 needs to be filed:

  • Amending or correcting something on the original UCC-1
  • When the secured party assigns their rights or interest to another party
  • To continue the financing statement when it is nearing lapse
  • When the loan has been fully paid off, to terminate the security interest
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So if you are acquiring a loan that has existing lien filings, you would file a UCC-3 showing the assignment. Or if you pay off a loan with liens, you file a UCC-3 termination. Things like that.

How Do You Fill Out a UCC-3 Form?

UCC-3 forms can look intimidating. But they are simpler than people realize. Here is a breakdown of each section:

Initial Financing Statement File Number

This identifies the initial UCC-1 financing statement that you are amending. You can usually find this file number on the original UCC-1 form. Every state has slightly different formats for the file number. But it is an important piece of info connecting the UCC-3 back to the original lien filing.

Secured Party Authorizing This Amendment

This section names the secured party of record authorizing the UCC-3 amendment to be filed. So whoever currently holds the security interest according to the last UCC filing.

Changes in Secured Party Data

This section is used when the loan or security interest is being assigned from one secured party to another. So like in my example above with Bank A assigning their loan and security interest to Bank C. This section would name Bank C as the new secured party taking over the loan.

Collateral Change

This section can amend the collateral listed in the original UCC-1 filing. For example, maybe additional assets are being added or removed as collateral securing the loan. That change in collateral would be listed here.

Continuation

Most UCC filings expire after 5 years. So this section is checked to file a continuation of the financing statement and extend its lapse date by another 5 years. Businesses often file continuations if the loan or security interest remains unpaid and active after 5 years.

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Termination

When the loan is paid off, this section terminates the UCC filing altogether. Checking this box terminates the security interest when the debt has been satisfied. Filing a termination is important to clear the collateral of any liens.

The rest of the form deals with signatures, mailing addresses, and standard filing info. But the sections above are key for understanding whether you are amending, assigning, continuing, or terminating a UCC filing.

Common Mistakes

Some common mistakes I see with UCC-3 forms:

  • Leaving old secured party data in place – Failure to fully update the secured party info when assigning to a new party
  • Missing collateral description – If amending collateral, the new description must be included
  • No file number – Forgetting to include the initial financing statement file number
  • Terminating too early – Accidentally terminating before loan payoff

It’s important to fully update all relevant sections based on the type of amendment being made. Leaving old data or missing information can invalidate the filing.

Amendment Formatting

When amending a UCC-1 filing, follow these formatting guidelines:

  • Additions should be underlined
  • Deletions should be stricken/crossed out
  • List collateral changes in proper order

Clearly show what is being added or removed. Strike through removed language. Underline new additions. This makes the changes easy to see for filing offices.

After Filing

After your UCC-3 is filed, review the filing acknowledgment. Make sure there are no errors or rejections from the filing office. Check that the information shows properly in the UCC filing database. Amendments won’t be effective until the UCC-3 is accepted and registered without issues.

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Also send copies of any assignments or amendments to other parties involved, like the borrower/debtor if their info needs to be updated.

Key Takeaways

The main takeaways about UCC-3 forms:

  • Used to amend, assign, continue or terminate a UCC-1 financing statement
  • Clearly identify initial file number and current secured party
  • Update relevant sections based on type of amendment
  • Use proper formatting for additions/deletions
  • Review acknowledgment and fix errors before effective

Hopefully this gives you a better understanding of how to use UCC-3 forms properly. They play an important role in updating secured transactions and lien filings over the life of a loan. Let me know if you have any other questions!

References

UCC Article 9 Overview: https://www.law.cornell.edu/ucc/9

Instructions for UCC Financing Statement Amendments (UCC-3): https://eforms.com/ucc/ucc-3-form/

Secured Transactions – UCC Article 9: https://www.law.cornell.edu/wex/secured_transactions

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