Avoid these costly UCC3 mistakes that can jeopardize your secured position.
When it comes to UCC3 Amendment filings, accuracy and timing are critical. Even a small error on a UCC3 can have serious consequences, ranging from rejection of the filing to the loss of your secured position. Below are three of the most common mistakes lenders and secured parties make, and some practical suggestions for how you can avoid them.
1. Using the Incorrect Original Filing Number
The original filing number is the key reference point that links your UCC3 change to the right UCC1 Financing Statement. Entering the number incorrectly can:
- Cause the filing to be rejected by the filing office, adding time and potential costs to your filing process.
- Result in an Amendment that doesn’t actually affect your intended filing.
- Accidentally amend another secured party’s filing.
The best way to avoid this mistake is to use a reliable UCC filing and portfolio management system. Automation reduces the risk of manual data entry errors and ensures your Amendments are properly linked and accurately indexed in the public record, assuring your continued perfection.
>> MYTHBUSTERS: Don't Get Fooled by These Common UCC Filing Myths!2. Submitting Multi-Purpose Filings
A UCC3 that attempts to accomplish multiple actions, such as an Amendment and a Continuation in the same filing, may trigger problems. While some states allow multi-purpose filings, they often:
- Reject filings with multiple actions.
- Only index one of the requested changes.
- Impose additional charges for processing.
Because state practices vary, the safest approach is to submit only single-purpose change forms. If you do choose to submit a multi-purpose change statement, be sure to confirm state-specific rules in advance or work with a service provider you trust to streamline the process and confirm complete and accurate indexing.
PRO TIP: If you elect to file a multi-purpose filing, consider ordering a search to reflect (aka post-filing verification search) to confirm the state properly indexed both actions.
>> Did you miss our live UCC filing webinar? Watch the archived version on-demand!
3. Failing to File Timely Continuations
A UCC1 Financing Statement is effective for five years. To maintain your perfected security interest, you must file a Continuation within the six-month window before the lapse date. Missing this deadline means:
- The original filing lapses and is no longer effective.
- You lose priority protection.
- Other creditors may move into a priority position.
Once a Continuation is filed, the Financing Statement’s effectiveness is extended for an additional five years. Importantly, the new lapse date is calculated from the original lapse date, not from the date the Continuation was filed. In other words, a UCC Financing Statement always gets to run its full initial five-year term, and then the Continuation “tacks on” another five years at the end.
Avoiding this mistake requires diligent tracking of deadlines. Again, an online portfolio management system can help by providing reminders and automated tracking of UCC lapse dates.
Protect Your Position
UCC3 Amendments are essential to protecting your secured interests, and even minor filing errors can create costly complications. Partnering with CLAS and our UCC eZFILE® Filing and Portfolio Management System helps you avoid those risks. With intuitive UCC3 preparation, advanced continuation management tools, and expert human review, you can file with confidence - every time.
Contact CLAS today to request a demo to see the system in action!
For informational purposes only; content does not constitute legal advice.