The UCC process can be specific and regimented. As such, GoDocs does not provide UCC releases/terminations as this process must be handled correctly. We recommend Lender work with their UCC servicer for the proper forms and processes to accurately complete their request.
- The loan documents are signed, what are the next steps for the Fixture Filing and/or UCC-1?
- Once signed by Borrower/Mortgagor, the GoDocs Mortgage/DOT creates the lien against the collateral subject to the UCC, and serves as a Fixture Filing, which is a type of UCC filing. Since the Mortgage/DOT is recorded at the county level in the land records, this would satisfy a Lender’s “UCC filing” at the county level, including perfection, as to Fixtures.
- In addition to this, GoDocs includes a separate UCC1 Financing Statement, a “filing on a fixture,” which is filed with the applicable state Secretary of State (i.e., the state where the Borrower/Mortgagor resides if an individual, and the state where the Borrower/Mortgagor is formed if an entity), not in the county land records. This is necessary to perfect the Lender’s security interest in those portions of the “UCC Collateral” described in the Mortgage/DOT other than Fixtures, e.g., Personalty. This is also a belt-and-suspender approach as to perfection of Fixtures, as the description of the collateral in the UCC1 Financing Statement would also include Fixtures.
- What are the Fixture Filings and/or UCCs meant to do?
- A UCC-1 Financing Statement and Exhibits for Filing is a form that is used to file a security interest in personal property under Article 9 of the Uniform Commercial Code (UCC). A UCC-1 Financing Statement is used to give notice to the public that a creditor has a security interest in a debtor's personal property. This means that if the debtor defaults on the loan, the creditor may be able to seize and sell the property to satisfy the debt. The UCC-1 Financing Statement is an important document for both creditors and debtors. It helps to protect creditors' interests in the event of a default and it helps to ensure that debtors are aware of their obligations.
- With both (i) the Fixture Filing (the GoDocs Mortgage/DOT) and (ii) the “filing on a fixture” (the GoDocs UCC1 Financing Statement), Borrower/Mortgagor cannot argue the Lender’s lien is perfected on less than all of the subject UCC Collateral in connection with the Loan.
- Where do I file the UCC-1s?
- Please note the UCC1's are not intended to be recorded at the county level and are for filing at the state level only. In all cases, a UCC-1 should be filed with the Secretary of State in the state where the individual lives or the formation state of the entity. This includes both the fixture filing and the personal property UCC filing.
- Then, the mortgage/deed of trust with a UCC fixture filing included in it should be recorded in the county where the property is located so the lender has a perfected security interest in the fixtures located on the real property.
- GoDocs produces two filings (1) Personal and (2) Fixture, in which both would be filed with the State in where the borrowing entity was formed or the individual lives. There is not a separate UCC form filing for county? Does the Mortgage/Deed of Trust have a provision embedded in the document for this?
- All GoDocs document packages include a fixture filing financing statement as part of the deed of trust or mortgage as stated above at the county level. A state UCC-1 is filed with the secretary of state to perfect Lender's security interest in the personal property collateral attached to or part of the mortgaged real property. Filing a UCC-1 also puts the public on notice of Lender's lien in all states. The UCC-1 compliments the fixture filing included in the mortgage which creates and perfects the personal property lien but puts the public on notice of Lender's lien only in the county in which the mortgage is recorded. Some Lenders elect not to file a UCC-1 as they must be continued every 5 years, terminated when a loan is repaid, or assigned when closed. If a separate UCC-1 is not selected for filing in the secretary of state's office in the state of formation for the borrower, then a third party lien holder would not discover the senior lien unless it checked the local county records' accordingly.
- The GoDocs mortgage/deed of trust is also an Assignment of Rents, Security Agreement and Fixture Filing. As the document is recorded at the property level (commonly the county), it facilitates local fixture filing recording. The UCC1 filing at the state level acts as the filing of the security agreement aspect of the mortgage/deed of trust. Regardless of UCC1 filing, the security agreement aspect of the document, under the UCC, is established. The security agreement, and accompanying UCC1, relates to the mortgage/deed of trust, is about collateral that is real estate, or fixtures of the real estate, but still considered part of the property. GoDocs does offer the ability to include non-real estate-related collateral through a separate General Security Agreement. When there is a mortgage/deed of trust security agreement and a General Security Agreement, there would be separate, specific UCC1s for filing at the state level, if the filing is desired.
- When General Security Agreement = Yes on the Loan page, there are two UCC filings. The first filing is a personal property filing. The UCC-1 references Exhibit A and Exhibit A is the GSA for personal property. The second filing is the security agreement of the mortgage/deed of trust. The UCC-1 references that the collateral is located on Exhibit B. Exhibit A is the location of the property (the legal description) and Exhibit B is the Fixture filing collateral. The UCC-1 Financing Statement (Personal Property Collateral) is triggered for inclusion if General Security Agreement = Yes on the Loan page. This UCC1 is for the General Security agreement, which is for all business assets; such assets are not real estate related collateral. The collateral is described on Exhibit “A”, attached thereto. There is only one exhibit. The UCC-1 Financing Statement and Exhibits for Filing is for the security agreement included with the mortgage/deed of trust and covers such real estate related collateral, that is not real estate or fixtures. The collateral is described on Exhibit “B”, attached thereto; Exhibit “A” is used to identify such collateral as “... which are used now or in the future in connection with the ownership, management or operation of the real property described [thereto]...”.
- When General Security Agreement = No so the second UCC personal property filing does not come in. The UCC-1 you see coming in is the security agreement of the mortgage/deed of trust. Because of that, exhibit A describes the location of the property (the legal description) and exhibit B is the exhibit outlining the real estate related collateral. As stated above if a GSA was selected you would have received a second UCC-1 wherein, exhibit A is the personal property GSA description.
- On the UCC, it states there is only Exhibit B, but Exhibit A & B is both included for filing so shouldn’t it reference both? Otherwise, title may not record with both exhibits?
- Title should never “record” a UCC1 provided by GoDocs. In all cases, a UCC-1 should be filed with the Secretary of State in the state where the individual lives or the formation state of the entity. The Exhibit “A” is referenced in Exhibit “B” and the document works together, as intended.
Best practice, however, is to file a UCC-1 - this is also required by both Fannie Mae and Freddie Mac.
Examples:
- Title should never “record” a UCC1 provided by GoDocs. In all cases, a UCC-1 should be filed with the Secretary of State in the state where the individual lives or the formation state of the entity. The Exhibit “A” is referenced in Exhibit “B” and the document works together, as intended.
This language differs depending on the property state, but this below is representative of the fixture filing that is included in each GoDocs package regardless of if separate UCC-1s are included.
GoDocs does not provide UCC releases/termination forms as the UCC process must be handled properly.
We recommend Lender work with their UCC servicer for the proper forms and processes to accurately complete this request.