FAQ: UCC Liens in New York

By Robert Jacovetti

A UCC filing allows small business owners to obtain loans in exchange for having a lien placed by the lender on equipment and/or business assets. Therefore, when you take out a secured loan, the lender may file a lien to protect the assets you committed to secure financing. This might be real estate, vehicles, inventory, etc.

If you are considering a UCC lien for your business or facing obstacles, you likely have many questions. Thankfully, our team at Jacovetti Law, P.C. has put together answers to the most common questions about UCC liens in New York.

What Does “UCC” Mean?

“UCC” stands for Uniform Commercial Code. The Uniform Commercial Code is a uniform law that governs commercial transactions, including sales of goods, secured transactions, and negotiable instruments. The Uniform Commercial Code has a set of statutes that are consistent across the country.

What Assets Can a Lender Place on a UCC Filing?

In most cases, a lender can place a UCC lien on a wide range of personal and business properties/assets. Common assets placed on a UCC filing includes:

  • Investment securities
  • Real estate
  • Vehicles
  • Inventory
  • Office equipment
  • Letters of credit
  • Promissory notes
  • Receivables
  • Commercial operating equipment

Can a UCC Filing Get Rejected?

Yes, UCC filings can get rejected. One of the most common reasons for rejection is when a UCC filing is not filled out on the proper form. Many filers don’t know that the National Standard UCC forms are not for debtors who are an organization (in New York State). Article 9 of New York’s Uniform Commercial Code requires that the type of organization and jurisdiction of an organization be stated.

Other common reasons include failing to pay the correct total amount due for the filing fee, the type of organization, and the jurisdiction of the organization was incomplete on the filing. It is best to have an experienced attorney guide you through the process.

Are There Any Disadvantages to a UCC filing?

Many small businesses seek loans to get the money they need to stay afloat during difficult times. However, even though it may seem like a quick and easy way to solve business problems, it may come with complications down the line.

A UCC lien can impact your business’s ability to take out another loan in the future. Since many of the assets you own will already be tied to the first UCC filing, you will have constrained resources to offer as collateral when taking out a loan.

Does A UCC Lien Impact My Credit Score?

Yes, your UCC liens from the last five years will show up on your credit report. Your credit score will show the status, collections, and debted sum of your UCC lien. However, depending on your situation, the UCC filing might not have a significant impact on your credit score.

Can I Remove a UCC Filing?

In most cases, UCC liens expire after five years, although the lender can file to renew your lien. If you pay the lien off before the five years are up, you can ask the lender to terminate the lien. You can also visit your secretary of state’s office to dispute inaccurate information on your business credit reports and remove your lien.

It’s important to note that lenders don’t always get around to removing your lien. That is why it is crucial to take proactive steps to ensure that your lien is removed upon payoff so that it won’t affect your business when looking for new loans.

What Should I Do If I Am Having Issues with UCC Lien Filings?

If you are dealing with UCC lien filing issues, including poorly structured filings, Jacovetti Law, P.C. can help. Our team of New York debt relief attorneys has in-depth experience handling UCC lien cases. We are familiar with the liens and can help you understand your legal rights to ensure that your business is protected.

Contact us today at (516) 217-4488 to schedule a consultation!