UCC-1 Filing: Perfecting Assets and Security Interests

A UCC-1 filing is a financial statement used by a creditor to stake a claim of interest on the property of a debtor. This can be a valuable tool for perfecting assets and security interests.

Security Agreements

With the exception of a few statutory and regulatory situations, a security interest can be made on any asset. For personal property assets, security interests are regulated by Article 9 of the Uniform Commercial Code. Article 9 states that physical goods, intangible goods, tort claims, and accounts all qualify as personal property.

To legally be considered personal property, an asset must be listed in a security agreement. These security agreements must be authenticated, written, and include a thorough description of any collateral. They should also explicitly state the grant of the security interest.

After the basic requirements for a security agreement have been met, the creditor may check the qualifications for a UCC-1 filing. The value of the collateral must be stated, and the debtor must legally possess the rights to that asset. To prevent other creditors from claiming the collateral after the debtor’s bankruptcy, one should perfect the security agreement by filing a UCC-1 financial statement. If the asset meets the requirements of Article 9, the creditor can be prioritized over third-party creditors.

Classes of Collateral Assets

A UCC-1 filing can be used by a creditor to prioritize their lien for a wide range of assets. In general, any asset that meets the requirements in Article 9 can legally be listed as a collateral asset.

Real Estate

Commercial and residential properties can be listed as a collateral assets in a lien, so they are valid in a USS-1 financial statement. Land is also valid according to Article 9.

Vehicles, Machinery, and Equipment

Assets in this category are tangible, and they can be easily appraised. They are valid assets per Article 9.

Financial Instruments and Cash

Financial instruments can be listed as an intangible good, and they have a definite value. They undoubtedly qualify as personal property assets under Article 9. Cash deposits can also be claimed by a UCC-1 financial statement.

Intellectual Property

Intellectual property assets can be difficult to appraise, but they certainly fall under the category of intangible goods.

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