What is a UCC filing?

The Uniform Commercial Code (UCC) governs commercial transactions between a debtor and a secured party. It is not federal law. Instead, it is uniform laws adopted at the state level. S. C. Code of Laws Title 36, Article 9 contains the laws adopted in South Carolina. 

A UCC filing is a security instrument used by lenders. It creates a lien on a borrower’s assets. The collateral may be one item or a group of items. Lenders file UCC Financing Statements (UCC-1) to notify other parties that the lender has a security interest in the property described in the UCC filing. 

Many types of assets can secure a UCC filing. According to our South Carolina corporate lawyers, assets that might be pledged as collateral using a UCC filing include:

  • Inventory
  • Real estate fixtures
  • Letters of credit
  • Accounts receivable
  • Household furnishings
  • Office equipment and fixtures
  • Heavy machines and commercial equipment
  • Operating equipment 
  • Investment securities
  • Vehicles
  • Bank or trade accounts
  • Other tangible assets used or owned by a business

A UCC filing does not impact the operations of a business unless it wants to borrow additional funds. Lenders may not want to “get in line” behind another creditor who holds the first position for secured collateral. 

A UCC statement may create a lien on a specific asset. However, a “blanket UCC” creates a security interest in all of a company’s assets. As a result, a blanket UCC statement could make it much more difficult for a company to obtain additional loans and lines of credit until the UCC is canceled, satisfied, or expires. 

UCC statements are valid for five years. However, filing a UCC-3 statement extends the UCC filing for an additional five years. 

Where Are UCC Statements Filed in South Carolina?

UCC filings may be filed against a business or a person. The Secretary of State’s Office handles UCC filings throughout the state. Filings may be submitted online, by mail, or in person. In addition, the public may search the UCC filings through the Secretary of State’s Office. 

Some UCC statements should be filed with the Secretary of State and the county offices. The county of filing would be the county of residence for the debtor or the county where the secured property is located. 

The types of UCC filings that should be filed with both the state and county offices include:

  • Tax liens
  • Real estate fixtures
  • Mineral rights
  • Timber 

Failing to file your UCC statement with the correct government office could make the UCC unenforceable. 

UCC statements are a “first come, first secured” lien. In other words, the lender who files the first UCC statement holds priority for the secured collateral. Therefore, it is essential to submit a correctly completed UCC statement to the required office as soon as possible after the debt is created.

Contact Our South Carolina Business Attorney for More Information 

You do not need a lawyer to prepare and file a UCC statement. However, seeking legal counsel from an experienced South Carolina Business lawyer can ensure the UCC is prepared and filed correctly. Mistakes could make the UCC filing unenforceable, which limits your options for collecting a bad debt. Get in touch with our office today for a free consultation.