We are refinancing a loan from another bank. We have asked them to assign their UCC financing statement to us.

We have our own note and security agreement. Are there any hoops I should be looking for in order to perfect and retain the other bank's first position?

Our security agreement apepars in order and covers the items listed on the other bank's financing statement.

When refinancing a loan from another bank, the better approach to guaranteeing yourself first position would be to simply have the old bank release their UCCs and do your own UCC filing. The only time not to do it this way would be if your lien searches show an intervening lien from someone else and even then, if possible, I would prefer to get the intervening lien either released or subordinated. In fact if that's not possible, you might want to think long and hard about doing the refinancing in the first place.

If your bank is "refinancing" the other bank's loan, technically the other bank's loan is paid off with the proceeds of your loan thus making the old UCC no good anyway. The only way to prevent this is to actually structure the transaction as an assignment of the other bank's loan and loan documents. In addition, the validity of the other bank's UCC is dependent upon whatever defenses the borrower might have against that bank which you may not know.

Teri Rasmussen

Thanks for your help. CT