Blanket UCC filings

Back in the day, we wrote "all assets" on the security agreement and the financing stmt and walked away.

My lenders still want to do that. (Old dog/new trick problem!) Our old loan platform had the big description of all assets on the security agreement and then we filed a UCC-1 that said "all assets." (Don't even get me started on that...)

Our new platform has revised language in the security agreement that doesn't cover any deposit accounts. Instead, we are looking at having the customer sign a separate deposit assignment that covers "any deposit accounts" in addition to the security agreement and then file the same "all assets" UCC-1.

Why does theis feel all wrong even though attorneys are nodding along?

Thoughts from the gurus?

First of all, even under the old law (1972 revision of Article 9) listing the collateral as all assets was ineffective. This was because of case law and not statutes. However, in Revised Article 9 (the 1998 revision) it is statutorily wrong for a security agreement (9-108) but OK for a financing statement (9-504) if the debtor has signed something (other than a security agreement) to authorize such a filing. (9-509)

As for deposit accounts, you are wasting your time filing to perfect the security interest. Deposit accounts can only be perfected by control. (9-312) If you are the depository institution, once your security interest attaches it is perfected, you need do nothing else to perfect because you already have control. However, if you are not the depository institution, then you must have a control agreement signed by the owner of the account, the depository institution and the secured party. (9-104) You will probably find that no depository institution, in their right mind, will sign such an agreement.

Have your attorney attend one of my two-day CLE courses on Secured Transactions Law.

Tom, you always make me feel sane again.

Our guy said again yesteray that we were perfected (on deposit accounts) by filing. I wasted most of my breath arguing.

I lost the last argument on having our financing stmts say "All assets."

I may send him to the course out of my own pocket just to relieve my own stress.

When your attorney says something that you don’t understand, you should ask them to cite where you can find that information. You’re not doing it because you think they are wrong, but only for your edification.

When they try to cite it, that is when they will discover their error.