Willcox, Buyck & Williams, PA discusses what you need to know about UCC filings.

Understanding UCC Filings

UCC (Uniform Commercial Code) filings are financing statements filed by mortgage companies, banks, creditors, and other lending institutions against secured collateral. The purpose of a UCC filing is to place other creditors on notice that a creditor has a secured lien against certain collateral that a debtor may be attempting to pledge as collateral for a loan. While creditors, lenders, and other lending institutions may file a UCC statement without the assistance of an attorney, many creditors seek legal advice from a South Carolina business lawyer to ensure that the UCC filing is correct and enforceable. 

Five Things You Might Not Know About UCC Filings In South Carolina

1. The South Carolina Secretary of State’s Office Handles UCC Filings

UCC statements are filed with the South Carolina Secretary of State’s Office. The filings may be submitted online and searches of UCC filings may be conducted via the internet through the Secretary of State’s Office. Filers may also submit UCC statements for filing through the mail or in person at the Secretary of State’s Office in Columbia, SC.

2. Some UCC Statements are Filed with County Offices

In addition to filing a UCC statement with the Secretary of State’s Office, UCC statements that cover real estate fixtures, timber, mineral rights, and tax liens should be filed in the county of residence for the debtor (the person who owes the money) or the county in which the property is located. 

3. UCC Liens Can Be Filed Against Businesses and Individuals

UCC statements can be filed against an individual or legal entity. An individual or business may pledge a variety of assets as collateral for a debt, including but not limited to:

  • Inventory
  • Accounts Receivable
  • Office Equipment
  • Vehicles
  • Real Estate Fixtures
  • Letters of Credit
  • Commercial Equipment 
  • Investment Securities
  • Commercial Instruments, such as promissory notes or drafts
  • Other Goods Used or Owned by a Business 

4. UCC Statements Do Not Prevent Additional Loans Secured by the Same Collateral

A UCC statement does not prevent another lender from loaning money secured by the same collateral listed on a filed UCC statement. However, the subsequent lender is “inline” behind the creditor who filed the first UCC lien. If the debtor defaults on the loan terms, the creditor who filed the first UCC statement has the priority to seize the collateral and sell it to satisfy the debt. UCC statements place lenders on notice that they are getting “inline” behind one or more other lenders who have liens on the same collateral.

5. UCC Blanket Liens Cover All Business Assets

Many UCC statements are filed for specific collateral. However, a business may pledge all of its assets as collateral for a loan under a blanket UCC filing. A blanket UCC filing could make it more difficult for a business to obtain additional funding until the UCC statement is satisfied and canceled of record. Lenders typically prefer blanket UCC liens, but it is not always a wise choice for a business. 

Contact Our South Carolina Business Attorney for More Information About UCC Filings

Disputes and issues related to UCC filings can be time-consuming and costly. Before filing a UCC or signing a UCC statement for a lender, it can be beneficial to consult a South Carolina business attorney to discuss your legal rights and obligations regarding a UCC lien.