Risk Management Blog

UCC & Corporate Due Diligence

Resource Guide for Legal and Financial Professionals

Did You Know a Judgment Lien Can Potentially Prime Your Perfected Security Interest?

UCC, Due Diligence

It’s not common knowledge, common in the way everyone knows how a Federal tax lien can prime a perfected security interest. But it’s true. Check out this article from Pahl McCay’s Catherine Robertson discussing the subject.

Her final recommendation can be found at the end of her article, “we recommend you maintain a monitoring service for lien filings against your debtors.

The critical aspect here is that the monitoring recommendation is NOT just for Federal tax lien monitoring; essentially, that is not enough and more comprehensive coverage is required to address other lien types and public record events which can potentially prime your perfected security interest.

This and other critical insights were shared as the factoring world came together in New Orleans earlier this month at the annual International Factoring Association conference. There is general acknowledgment from the factoring industry of the need to monitor but with so many solutions to choose from, how does one decide? Perhaps more than one solution is best to blend the monitoring solutions, diversify the coverage, and so be able to catch more of the possible events that might prime your perfected security interest.

When choosing your monitoring coverage options, consider the following:

  • Is the monitoring service Lien-Focused Research (Federal & State Tax Liens and Judgment Liens, UCCs)?
  • Does the monitoring service utilize ONLY Direct Data Search Results from State and County Jurisdictions?
  • Does the monitoring service utilize Search Methodology that Uncovers and Reports Name Variations?
  • Is the monitoring service integrated into your lending software to maximize efficiency?
  • Does the monitoring service also include Corporate Status, Litigation and Bankruptcy Monitoring?

What monitoring coverage options do you and your underwriters utilize?Let us know and tell us why.




Leave a Reply