A UCC-1 financial statement (abbreviation for Uniform Commercial Code-1) is a legal form given by a creditor to give notice that it owns or may have an interest in the debtor's personal property (a person owed to the creditor as usually specified in the agreement that creates the debt). This form is submitted to "fine-tune" the creditor's security interests by giving notice to the public that there is a right to take and sell certain assets for the repayment of certain debts with a particular priority. Such sales notices are often found in local newspapers. Once the form has been filed, the creditor sets a relative priority with the other debtor's creditors. This process is also called "perfecting security interest" on the property, and this type of loan is a secured loan. The financial statements may also be filed in real estate records by the lessor of fixture to assign priority of the lessor's rights to the mortgage holder or other liens on the actual property. The creditor's rights to the debtor and the lessor's rights to the lessee are based on credit and lease documents, respectively, and not a financing statement.
In accordance with the standards set out in the UCC, on 9-503 and 9-504, the financing statement shall only contain three parts of the information:
- the name and address of the debtor
- the name and address of the creditor
- indication of collateral, "whether specific or not, if it makes sense to identify what is described." (UCC 9-108)
The financing statement is generally filed with the state secretary's office, in the state where the debtor is located - for an individual, the country where the debtor is located, for most types of business organizations, states or organizations. Many states have state agencies operating under the state secretary, who oversees the organization and business activities, including the receipt of financial statements. However, an exception exists if the collateral is something that is bound to a particular part of the real property, such as wood, mineral rights, or equipment. In this case, archiving should be done in the area where the property is located, usually in the registrar or local courts, because that is where the third party is most likely to look for the records.
In the case of a loan secured by a private property collateral, the submission of a finance report provides notice of a lien against the property so that other lenders or private property buyers will know the security interests. In the case of submission of a financing report by a lessor of fixture, the filing of a finance report provides notice of the interest of the lessor to another party earning interest in the real property and associated equipment. The financing statement does not create the lien nor does it create additional rights to the lessee who supports the lessor, the submission of the financing report only gives notice of any rights that the creditor or lessor owns under their own loan or lease documents.
Video UCC-1 financing statement
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