Did you know that the average American has more than $90,000 of debt? Clearly, debt is something that both borrowers and lenders are concerned about.
This is why it’s so important to understand different financial rules and documents. One thing that borrowers need to know about is UCC3.
What is UCC3 and how does it work? Keep on reading to learn more!
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What Is UCC3?
UCC3 termination and continuation programs have been all over the news lately. Under Article 9 of the Uniform Commercial Code (“UCC”), a UCC3 is a filing that’s used to track a change to a UCC1 filing.
This includes amendments, transfers, terminations, and continuations.
A UCC1 statement is a legal notice that a creditor files. It’s used to declare to the public that they have the right to take the property of a debtor. These notices are printed in local papers.
A UCC1 is required for a business loan as it sets a rule for which assets can be seized and in what order.
On the other hand, a UCC3 filing is used to change or terminate a UCC1 statement.
Overview of UCC-3 Terminations
A UCC3 termination statement is needed to terminate a security interest listed in a UCC1 filing. To accomplish a termination for personal property, you’ll need to file a UCC3 form with your state’s Secretary of State.
For non-consumer goods, UCC requires that a new party cause an existing party to file the termination.
It should be noted that UCC3 termination doesn’t remove a financing statement from the recording index. A terminated financing statement can still be amended and even continued.
Overview of UCC-3 Continuations
A UCC1 statement lasts for five years. A party needs to file a UCC3 continuation if they want to continue their UCC filing.
A continuation is used to extend the life of the statement for another five years. This continuation needs to be authorized by the lender and filed within six months before the UCC1 is set to expire.
If the continuation is filed before that time window then the continuation won’t be effective and will be discarded.
If a continuation is filed after termination then that means that the termination was likely filed incorrectly. Sometimes, a termination is filed without being authorized by the right party.
This can create all kinds of problems for the lender and borrower.
It’s important that you read about UCC3 change statements to get a better understanding of how it all works.
The Importance of Knowing About Types of UCC3
Hopefully, after reading the above article, you now have a better understanding of what UCC3 is and how it all works. As we can see, this is a complicated subject but one that you need to understand if you ever take out a business loan. As we can see, this is a complicated subject but one that you need to understand if you ever take out a business loan.As we can see, this is a complicated subject but one that you need to understand if you ever take out a business loan.
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