Are you forming an LLC and planning to file your business Uniform Commercial Code paperwork? If so, there are a few things to keep in mind to avoid making common mistakes.
We’ll discuss the most common pitfalls individuals make when filing their LLC’s Uniform Commercial Code Filings paperwork. With adequate knowledge of these mistakes, you’ll ensure a smooth process and successful filing. Let’s dig into the details.
1. Failure To Indicate The Correct Name Of The Debtor In The Debtor Name Field(S).
When filing UCC forms, check the debtor’s name for accuracy. Ensure correctness by reviewing the charter document for registered firms.
Review any amendments and check for unexpired state-issued driver’s licenses or ID for each debtor.
Consider styling the filing name as closely as possible to what appears on these documents.
Trusts should not list trustees in the debtor box, either list an appropriate trust name or the debtor’s name instead. Filing UCC forms will be much more efficient and successful if you double-check necessary documents.
2. Submitting UCC3s with Multiple Functions In States That Don’t Allow It.
Not all states allow multiple functions in a UCC3 filing. Although some central filing offices will accept multiple functions, their index may be incorrect.
Consult professionals to learn which states permit different types of multiple filings and the associated risks. Educating yourself on the subject helps you understand the process.
3. Incorrect UCC1 File Number Listed On UCC3.
Having an incorrect UCC1 file number listed on an amendment filing is a major issue that filers need to note. If the number is wrong and accepted by the filing office, you’ll get connected to an unrelated UCC1 on record. This can cause serious problems down the line.
To avoid this teaming mistake, run a post-filing search to ensure UCC1 file number accuracy. Failure to do so might lead to costly financial discrepancies due to unexpected misapplication.
4. Failure To Include All Of The Debtor Or Secured Party (Sp) Information On Debtor Or Sp Name Or Address Changes.
When filing documents to a state’s records, it may be unsuccessful if you omit debtors’ information. Most states treat name or address changes as if it were a new person filing. It’s best to include all original details when submitting the filing.
Delaware is an exception to this rule; they allow only changed/new information to be filed as long as it falls within state guidelines.
For many filers, completing irrelevant information due to this approach can seem tedious and time-consuming. Therefore, understanding the degree of information that needs to accompany filings is important depending on which state you are filing in.
5. Filling Out The UCC3 As A Secured Party Name Change When It Is Intended To Be An Assignment.
Clients may be unexpectedly asked to explain their name changes on filings, especially when the new name appears unrelated. Research and analysis show that most cases could be better handled as assignments instead of a simple title change.
6. Failure To Include The Debtor’s Name On UCC3s In States That Require It.
Filing a UCC3 form requires caution, and understanding each state’s requirements makes all the difference. When filing an amendment to a security agreement involving the debtor, many states require the debtor’s name to be provided.
Neglecting this detail could cause serious delays in the process or lead to outright rejection of the paperwork. Understanding intricate details such as these will help ensure that submissions are accurate and accepted in a timely manner.
7. Failure To Include The Legal Description Of The Real Property On UCC3 Fixture Filings.
While filing UCC, it is mandatory to clearly note the legal description of the real estate in question. This ensures that despite making an amendment, others can also confirm it by looking it up on the real estate records. Filing a UCC3 properly is extremely important and attention to detail is key to achieving it.
8. Failure To Include Tax Information In States That Require It.
Depending on where you choose to do business, the state’s tax policies can vary greatly. For example, Florida implements a documentary stamp tax while Tennessee enacts a recordation tax. Additionally, Alabama and Maryland require taxes to be associated with any local UCC fixture filing.
These taxes are one-way states that distinguish themselves from one another. Each establishment needs to familiarize itself with the applicable local laws to ensure compliance and remain operational in its respective jurisdiction.
9. Providing Additional Debtor Or Secured Party Names On An Exhibit, Instead Of The Designated Ucc Form Fields.
Filing documents serves a critical purpose in allowing us to protect our important information from further eyes. Filing documents with certain parties in mind helps ensure that those who can access this information know what they seek
It’s useful when dealing with confidential or high-value documents, because the filing office may not index additional parties.
Taking extra measures when filing documents and carefully entering the debtor’s information secures party fields. It also ensures that confidential information remains private. That way, we can be sure only those with our consent will have access to it.
10. Multiple Secured Parties On Ucc1 Require All Parties To Act When Filing UCC3s.
UCC3 document amendments can have a major impact on all secured parties. It ensures their interests in the security agreement remain secure. All those authorized to do so must confirm they are ready or not when amending forms.
It helps you avoid disputes, ensuring continued rights for everyone involved. Ignoring this step could cause serious problems down the line.
