Getting the debtor’s name right on a UCC filing isn’t simply important; it is the foundation for perfecting a security interest under Article 9 of the Uniform Commercial Code. To ensure name accuracy, it is standard procedure to collect evidence by obtaining a UCC search and copies of the debtor’s formation documents from the relevant state department of corporations. This diligent process can provide the legal name required to perfect the UCC financing statement and mitigate costly errors.
What is a UCC Filing?
A UCC filing is a public notice that informs everyone that a lender has a legal claim to perfect a security interest in specific collateral, such as equipment or inventory, until the loan is paid in full and the UCC-1 is terminated or lapses.
- UCC1 is the original financing statement
- UCC1 Blanket Lien covers all of a company’s assets, not just a specific piece of equipment or inventory
- UCC3 is an amendment to a UCC-1 to amend, assign, continue, or terminate. The UCC-3 must include the original file number and date.
What is the Difference Between a UCC Filing and a Financing Statement?
This is a widespread question, but there is not much difference, and they are often used interchangeably. A UCC filing is the process of submitting the document, a UCC financing statement, to the appropriate jurisdiction.
The Importance of the Debtor Name
It is essential for the lender to include the debtor’s name on the financing statement accurately. According to monitordaily.com, a leader in the commercial finance industry,
Under Article 9 of the Uniform Commercial Code, accurately capturing the debtor’s name on a financing statement is essential for perfecting a security interest. For businesses, this means using the exact name from the company’s formation documents, such as the Articles or Certificate of Incorporation. Filings are indexed under the debtor’s name, so even minor errors—including omissions, extra titles, or using only a trade name—can render the statement “seriously misleading.” If the name is not correct, the security interest won’t be perfected, and the lender may lose its priority claim.
There is one notable exception: if a search of the UCC records in the filing office, using the correct debtor name and the state’s standard search logic, would still reveal the filing (even if the name itself isn’t perfect), then the record may still be considered effective. However, to avoid risk, it’s always the filer’s responsibility to get the debtor’s name right and not rely on any search logic exceptions.
Best Practices for Verifying the Debtor Name
As we discussed, the accuracy of the debtor’s name is essential. Verifying the debtor’s name depends on whether the debtor is an individual or an entity. According to the American Bar Association:
For a registered organization debtor, the financing statement must provide the organization name in the “public organic record.” For an individual debtor, the financing statement must provide the name on the debtor’s driver’s license or other permitted identification card. Areas of uncertainty exist, however.
“Public organic record” is a defined term in Article 9 and generally refers to the formation documents that state the name of the entity. However, other public records, including tax returns, certificates of good standing, and other official sources, often contain multiple variations of an entity’s name. Unless the filer understands what constitutes the public organic record and resists the temptation offered by other potential name sources, there is a substantial risk of error.
In simple terms, the lender or secured party must conduct a due diligence search of the public record, which may include a UCC search, copies of the formation documents such as Articles and Amendments, and, for individuals, a copy of the debtor’s driver’s license or, if permitted, a non-driver’s ID card.
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Resources: Nerdwallet.com, Forbes, monitordaily.com, American Bar Association,
