Fundamentals · Lesson 6 · 7 min
UCC Liens
Article 9 of the Uniform Commercial Code, how UCC-1 financing statements perfect a security interest, and why they matter for B2B credit.
Overview
A UCC-1 financing statement perfects a consensual security interest in a debtor's personal property — inventory, equipment, receivables, fixtures.
Filing is typically at the state level (often Secretary of State) in the state of the debtor's organization.
Priority generally follows the 'first to file or perfect' rule.
Key Concepts
- • Security agreement (the contract) vs. financing statement (the public filing)
- • Collateral description — broad vs. specific
- • Continuation statements (typically every 5 years)
- • Purchase money security interests (PMSI) and their super-priority
Common Mistakes
- • Filing in the wrong state because the debtor's legal entity sits elsewhere.
- • Failing to file a continuation, letting perfection lapse.
- • Vague collateral descriptions that don't actually cover the goods at issue.
Practical Examples
PMSI advantage
An equipment seller takes a PMSI in the delivered equipment and files a UCC-1 within the statutory window. That seller jumps ahead of an earlier-filed blanket lender as to that specific equipment.
Downloadable Resources
Educational use only. Not legal advice. Lien rules vary by state — consult licensed counsel.