What is UCC security?

Filing a UCC-1 allows creditors to collateralize or “secure” their loan by utilizing the personal property assets of their customers. In the event of the customer defaulting on their loan or filing for bankruptcy, a UCC-1 elevates the lender’s status to a secured creditor, ensuring they will be paid.

Is an unperfected security interest enforceable?

Although an unperfected security interest may be enforceable against the debtor, a properly perfected security interest will have priority over such unperfected interest.

What is a security interest under Article 9?

Article 9 of the Uniform Commercial Code (UCC), as adopted by all fifty states, generally governs secured transactions where security interests are taken in personal property. It regulates creation and enforcement of security interests in movable property, intangible property, and fixtures.

What does UCC 9 apply to?

Article 9 is a section under the UCC governing secured transactions including the creation and enforcement of debts. Article 9 spells out the procedure for settling debts, including various types of collateralized loans and bonds.

What does it mean for a security interest to attach?

A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment.

What is an unperfected lien?

An unperfected lien is a lien that was not filed legally or correctly by a lender.

What collateral does UCC cover?

UCC-1 filings typically use moveable assets as collateral, which can include vehicles, office equipment and fixtures, investment securities, inventory, receivables, letters of credit and other tangible items of value.

What is a UCC strict foreclosure?

A Strict Foreclosure is a process under the UCC whereby a lender receives all or a portion of its collateral in exchange for reducing all or part of the obligations owed by the company to the lender.