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UCC & Corporate Due Diligence

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Lien Monitoring Only at the State? It’s Risky

April 19, 2018 UCC, Due Diligence, Reduce Financial Risk, Lien Monitoring

When evaluating lien monitoring programs, programs that are designed to monitor your Financing Statements for lien filings that can prime your perfected security interest, it is important to recognize that many states do not maintain records of Federal Tax Liens or Judgment Liens Attached to Real Property at the state-level filing office. Nevertheless, these liens have the potential to prime a perfected security interest.

That’s why, in many cases, programs for lien monitoring only at the state can leave creditors short on their post filing due diligence. Some of the most common lien monitoring programs available offer state-level lien searches only, so their lien monitoring is only at the state level. Service providers can offer lien monitoring only at the state level for a very small fee, making them attractive to cost-conscious lenders. But there is risk.

For example, Federal Tax Liens are typically considered the most urgent of all liens because of their potential to prime a perfected security interest, but many states do not maintain Federal Tax Lien records at the state level filing office. This can be especially true when dealing with individual debtors rather than a business debtor. In these jurisdictions, only a search of the county index will uncover Federal Tax Liens since that is where they are filed.

A solution is to use a lien monitoring program designed to run interval searches on debtor names at both the state AND county level. These monitoring programs check for any new filing activity and then provide timely updates, alerting creditors to potential threats that may jeopardize their ability to collect. State and county lien monitoring provides a simple and economical way for secured parties to pay attention to other lien holder activity against their debtor.

Want to learn more about Lien Monitoring solutions at the County Level? Please contact us today and speak with one of our documentation experts and learn how FCS’ Monitoring Services, complete with affordable, accurate and timely reporting of county lien filings, are designed to take the headaches out of your post-filing lien, business entity and bankruptcy monitoring processes.

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