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UCC & Corporate Due Diligence

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Judgment Lien Attached To Personal Property Can Prime A Perfected Security Interest

June 22, 2017 UCC, Due Diligence, Lien Monitoring

Of course you’re aware that a federal tax lien can prime your perfected security interest 45 days after filing, knocking your UCC from first priority position if you do not act to protect your perfected position. It’s Factoring/ABL 101.

But what about a judgment lien attached to personal property? What impact can it have on your perfected security interest?

Turns out it can prime your first position UCC just like a federal tax lien can. A secured party which receives a Notice of Judgment Lien on a debtor with a perfected security interest will be protected for 45 days but then lose its priority position on subsequent advances until the judgment lien attached to personal property is resolved.

Another thing to note is that judgment liens cannot attach to personal property in all states. Many do not allow it. Be sure to check with legal counsel to assure you are operating under the correct guidelines state to state.

Also, implement a lien monitoring program which identifies judgment liens and reports them promptly. This means ensuring that any lien monitoring program you utilize includes County Searches since judgment liens are often indexed at the County Recorder’s Office.

Contact us today! Learn more about FCS’ Monitoring Services, designed to take the headaches out of your post-filing lien, business entity and bankruptcy monitoring processes.

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