Fixing UCC Lien Errors: Steps to Clear Up Filings is a serious matter. Below is a factual, scenario-based overview of how to address incorrect or misleading UCC filings. Our goal is to explain how an experienced attorney might approach these errors under relevant provisions of the Uniform Commercial Code (UCC).

Understanding UCC Lien Errors

A UCC-1 financing statement records a secured party’s interest in your business assets. When these filings contain mistakes—such as wrong collateral descriptions, typographical errors in names, or erroneous file numbers—it can disrupt future credit and sales transactions. Correcting these errors promptly is crucial for maintaining clear title and credit availability.

Why Fix Inaccurate UCC Filings?

  1. Credit Implications: Potential lenders may see conflicting or duplicative UCC statements and assume there are multiple liens against your assets.
  2. Collateral Confusion: An inaccurate collateral description can lead to disputes about what property is actually encumbered.
  3. Legal Vulnerability: Errors in UCC filings may open you to lawsuits or complicated negotiations with prospective buyers or investors.

Possible Scenarios and Strategies

1. Mismatched Debtor Name or Collateral Description

Scenario: The UCC filing lists a slightly incorrect corporate name (e.g., “ABC, Inc.” instead of “ABC LLC”) or describes your collateral inaccurately.

Strategy:

  1. Check State-Specific Name Requirements: Under UCC § 9-503, the debtor name must match the public organic record, such as articles of incorporation. A mismatch can render a filing seriously misleading.
  2. File a UCC-3 Amendment: Correcting a debtor name or collateral description requires an amendment form. Clearly identify the original filing number and explain the change.
  3. Confirm with the Secretary of State: After filing the amendment, verify it has been recorded. Keep copies of all documents.

2. Duplicate or Overlapping Filings

Scenario: A lender files more than one UCC-1 statement referencing the same debt, or a prior lender’s filing still appears active even though the debt is paid off.

Strategy:

  1. Review Loan Documentation: Determine which filing is valid and confirm payoff dates or release agreements.
  2. Termination vs. Amendment: If the lien is no longer valid, a UCC-3 termination statement is appropriate. If the debt remains but only one filing should exist, a UCC-3 amendment might suffice to consolidate the liens.
  3. Legal Leverage: In In re Motors Liquidation Co., 777 F.3d 100 (2d Cir. 2015), the court addressed termination statements and the complications of unintended filings. Ensuring clarity in amendments can avoid similar disputes.

3. Incorrect File Number or Missing Index Information

Scenario: The Secretary of State’s office enters the wrong file number or omits certain data, making the filing hard to locate in public records.

Strategy:

  1. Identify the Error Source: If the mistake is on the state’s end, submit a formal request to correct the record.
  2. Utilize Correction Statements: Under UCC § 9-518, if you believe a record is inaccurate, you can file a correction statement (sometimes called an information statement) explaining the inaccuracy.
  3. Maintain Thorough Documentation: Keep all proof of the original filing and any correspondence with the Secretary of State. This can protect you if third parties question the filing’s validity.

4. Lapsed or Expired UCC Filings

Scenario: A UCC lien automatically lapses after five years if not continued. However, your records still show an active lien.

Strategy:

  1. Check Continuation Dates: Under UCC § 9-515, a continuation statement must be filed before the five-year period expires. If it was not filed, the lien should have lapsed.
  2. Request Voluntary Termination: Contact the lender to confirm they did not continue the lien and ask them to file a termination statement if needed.
  3. Self-Help if Unresponsive: If the lender fails to terminate, consult an attorney about filing a correction or initiating litigation to clear the record.

Step-by-Step Strategy to Correct UCC Lien Errors

  1. Identify the Mistake: Obtain a copy of the UCC filing from the Secretary of State to confirm the error.
  2. Gather Supporting Documents: Loan agreements, payoff receipts, business registration data—any records clarifying the true facts.
  3. Notify the Secured Party or Filing Office: Provide a written request explaining the discrepancy, referencing the correct details.
  4. File the Right UCC-3 Form: Use UCC-3 Amendment to fix inaccurate data or UCC-3 Termination to remove a lien that should no longer exist.
  5. Verify Recordation: Confirm the filing office updated its records and that the error is no longer visible in public searches.

Working with an Attorney vs. DIY

While some entrepreneurs handle UCC corrections independently, legal counsel helps ensure all amendments, terminations, or correction statements align with state-specific UCC provisions. Mistakes in a correction filing can compound the issue, potentially requiring court intervention. An attorney with commercial law experience can streamline the process and resolve disputes effectively.

Conclusion: Act Quickly to Maintain Clear Title

Fixing UCC lien errors preserves your business’s creditworthiness and prevents future legal complications. A prompt, strategic approach—supported by a thorough understanding of state UCC rules—ensures your assets and reputation remain secure.
Contact a commercial law attorney to help clear up inaccurate UCC filings and safeguard your financial stability.