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#1154043 - 03/30/09 07:54 PM UCC filing
Cale_N_Oats Offline
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Cale_N_Oats
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Southern Illinois
I am new to banking, especially when it comes to filing a UCC. We did a search on out inventory prior to closing. Then we filed a few days later. My question is how long after a loan closes do you have to file your UCC. Its a blanket lien.
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Article 9
#1154266 - 03/30/09 11:11 PM Re: UCC filing Cale_N_Oats
Tom at HOME Offline
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There is no time limit. You just are not perfected (and have no priority over someone who is perfected) until you complete the last of the following four actions:
1. File a financing statement (UCC1),
2. Have the security agreement signed,
3. Fund the loan, and
4. The date the debtor owns (has rights in) the collateral.

The order does not matter, but you should have filed and then searched prior to funding so you would know your position prior to funding. Wise bankers do it, others think of all kinds of excuses why they should not pre-file.

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#1154371 - 03/31/09 01:00 PM Re: UCC filing Tom at HOME
Cale_N_Oats Offline
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So, lets say we do the search prior to funding the loan and se that we are first lien holders. So, we fund the loan and then file the UCC a few days later. Is that a violation under UCC or is it a dangerous practice? Our loan officers say they don't file until after closing because if the borrower decides to withdrawal then they don't want to have to pay for the filing. Our loan officer also says that their is a 20 day period in which you are granted perfection even though you have not filed the UCC, is that right cus i cant find it anywhere?
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#1154466 - 03/31/09 02:24 PM Re: UCC filing Cale_N_Oats
Cale_N_Oats Offline
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Southern Illinois
I found this:

Illinois Laws and Regulations
Banking Laws
CHAPTER 810 COMMERCIAL CODE
SUBPART 2. PERFECTION
810 ILCS 5/9-312


(e) Temporary perfection: new value. A security interest in certificated securities, negotiable documents, or instruments is perfected without filing or the taking of possession for a period of 20 days from the time it attaches to the extent that it arises for new value given under an authenticated security agreement.

(f) Temporary perfection: goods or documents made available to debtor. A perfected security interest in a negotiable document or goods in possession of a bailee, other than one that has issued a negotiable document for the goods, remains perfected for 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of:

(1) ultimate sale or exchange; or

(2) loading, unloading, storing, shipping, transshipping, manufacturing, processing, or otherwise dealing with them in a manner preliminary to their sale or exchange.

(g) Temporary perfection: delivery of security certificate or instrument to debtor. A perfected security interest in a certificated security or instrument remains perfected for 20 days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of:

(1) ultimate sale or exchange; or

(2) presentation, collection, enforcement, renewal, or registration of transfer.

(h) Expiration of temporary perfection. After the 20-day period specified in subsection (e), (f), or (g) expires, perfection depends upon compliance with this Article.

So does that apply to our blanket lien on inventory and all intangibles?
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#1154756 - 03/31/09 06:13 PM Re: UCC filing Cale_N_Oats
Tom at HOME Offline
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Quote:
So, lets say we do the search prior to funding the loan and se that we are first lien holders.


When you searched prior to funding, but failed to file before your search, you only discovered if someone else has a filing. You do not know your priority until after you have filed.

You have some loan officers who do not understand Article 9.

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#1154757 - 03/31/09 06:13 PM Re: UCC filing Cale_N_Oats
Tom at HOME Offline
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No, the 20-day temporary perfection does not apply to inventory and all intangibles because:
a. Under e) your collateral is not “certificated securities, negotiable documents, or instruments”;
b. Under f) the collateral is not in the hands of a bailee; or
c. Under g) the collateral is not security certificate or instruments.

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#1154774 - 03/31/09 06:26 PM Re: UCC filing Tom at HOME
Cale_N_Oats Offline
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Thats what i thought, thanks Tom you've helped me out a ton.
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#1154820 - 03/31/09 07:05 PM Re: UCC filing Cale_N_Oats
Cale_N_Oats Offline
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I just have one more quick question Tom. Our loan officers are saying they don't want to pre-file becasue if the customer withdrawals from the transaction then the bank has to pay for the filing and search fee. I know we can't charge this to the customer as a finance charge but is there some other way we can charge them this fee?
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#1155163 - 04/01/09 02:15 AM Re: UCC filing Cale_N_Oats
Tom at HOME Offline
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Penny wise and a pound foolish. You will lose more money by one small priority error than the bank has to pay for the filing and search fees over 100 years.

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#1155169 - 04/01/09 03:04 AM Re: UCC filing Tom at HOME
HRH Okie Banker Offline
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Oklahoma
Great advise Tom. I did have a manager at one bank that required us to record a UCC and have a final search in place before funding. I had another manager that required annual UCC searches as a way to monitor a customers borrowing activity.

The chance of a customer withdrawing that loan request and making you release a recorded UCC has to be very rare. I can count the times I seen this kind of withdrawal on one hand in my 30-cough years.
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