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UCC-3 for Factors: Understanding and Navigating Changes to UCC Filings


As the world of finance continues to evolve, the importance of keeping up with regulatory changes cannot be overstated. For those in the factoring industry, specifically, understanding and adhering to the Uniform Commercial Code (UCC) is crucial.

The UCC lifecycle begins with a properly filed UCC-1 Financing Statement. This filing serves as a public notice of the secured party’s interest in the debtor’s collateral and establishes claim priority position in the event of a debtor default

But what happens if a debtor name changes or if the life of the loan extends beyond 5 years when the original UCC-1 would expire?

This is where UCC-3 filings come in.

What Is a UCC-3 Filing?
A UCC-3 filing is a document filed under the Uniform Commercial Code to make amendments to a previously filed UCC-1 financing statement.

What Are UCC-3 Filings Used For?
UCC-3 filing statements can be used to make party or collateral amendments, continuations, terminations, or assignments related to a UCC-1 financing statement.

UCC-3 Filing Types
There are five distinct types of UCC-3 filings. Below we will review each type of UCC3, when it is used and any special considerations they may have.

Continuations: UCC-3 continuation statements are filed to extend the duration of a UCC-1 financing statement. UCC-1 filings have a defined period of effectiveness, typically five years, after which they expire. Filing a continuation statement ensures that the security interest remains valid for an additional 5 years beyond the lapse date of the original filing.

These are one of the most common UCC-3 filings you will see because many times, contracts extend beyond a 5-year term.

For example: If a business secures a multi-year contract and chooses to factor their accounts receivable for the duration of the contract, the Factor will need to file a UCC-3 continuation before the original UCC-1 lapse date or else the UCC-1 would lapse, and the Factor would lose their protection under the UCC

Special considerations: Continuations may be recorded up to 6 months before the UCC-1 lapse date. If your continuation is recorded after the lapse date, it becomes ineffective, and you lose your priority position to collect should the debtor default.

PRO TIP: Tracking continuation dates on your entire portfolio can be a daunting task but it doesn’t have to be. Partner with an online UCC solutions provider like FICOSO Online to perform UCC searching, filing, monitoring and complete portfolio management all in one secure location.

Party Amendments: This UCC-3 statement amends the debtor or secured party information included in the original UCC-1 Financing Statement. These filings can come through when there is incorrect information or an update to information from the original filing.

For example: If a Factor currently does business in Texas but decides to move their corporate offices to Delaware to take advantage of the business-friendly laws and courts there, the Factor will need to file a Party Amendment to update the location of their corporate offices since the original UCC-1 Financing Statement still maintains the old address.

Special considerations: These amendments often coincide with name changes and/or address changes to business entity documents of the parties involved and must be completed in a “reasonable time.” Since “reasonable time” is not defined, it is recommended to file the amendment as soon as possible to maintain accuracy.

Collateral Amendments: This UCC-3 statement adds or removes collateral from the collateral description or restates the collateral description completely.

These are appropriate when the terms of a loan are updated or if there is incorrect information in the original filing.

For example: A Factor has an established relationship with a debtor to purchase their accounts receivables. Over time, the business relationship grows and now the debtor wants the Factor to also provide financing against their inventory so they can maximize the funding available to the debtor. This would require the Factor to file a UCC-3 Collateral Amendment to add the inventory as additional collateral.

Special considerations: A collateral restatement is a replacement of a prior collateral description, not an addition, so a secured party’s security interest in any collateral that is not fully restated in the UCC3 collateral amendment risks becoming unperfected.

Assignments: This UCC-3 statement transfers the secured party’s interest in collateral to another party.

It is filed when a lender transfers ownership of collateral associated with a loan to another lender, and it outlines the details of the new agreement.

For example: A smaller Factoring company gets purchased by a larger Factor. In this case, the company getting purchased would file UCC-3 Assignments on their entire portfolio effectively transferring their rights and interests to the larger Factor.

Special consideration: There are times when a new UCC-1 Financing Statement is required instead of a UCC-3 Assignment. An example of this would be a change in jurisdiction. If you have questions about your specific case, please contact one of our dedicated customer service representatives here.

Terminations – This UCC-3 statement ends the secured party’s ownership in collateral associated with a loan. It is filed when the loan contract has been satisfied, and it confirms that the secured party no longer has a legal interest in the collateral.

For example: A small business and a Factoring company enter into a contract and that contract has ended. The small business has fulfilled its financial obligation and there are no more remaining accounts receivable to be factored. In this case, the Factoring company would file a UCC-3 Termination to release its security interest in the accounts receivable.

Special considerations: A termination can be recorded by the debtor under certain circumstances (loan repayment, lease termination, sale of collateral, Factoring contract conclusion).

Common UCC-3 Filing Mistakes
Below is a list of common errors that can show up on UCC-3 filings and that can affect the secured party’s priority position.

Multipurpose Filings: A multi-purpose UCC3 filing is one that attempts to make multiple changes to the original Financing Statement on a single UCC3 form.

For example: A single UCC3 filing that aims to amend a debtor name AND continue the UCC-1.

While there are some jurisdictions that allow certain combinations of changes to be submitted on a single UCC3 form, most require a unique UCC3 form for every change a filer wishes to make to the original record.

Incorrect Original Filing Information: To make the necessary change to the record, a UCC-3 must list the correct filing number from the original UCC1 Financing Statement. Failing to list the proper UCC1 filing number could result in a rejected filing or may inadvertently amend another party’s filing in error.

Untimely Continuations: It is important that Continuation Statements be submitted for filing at the right time. If you submit your continuation too early, it will be rejected by the filing office; if you submit it too late, your filing will lapse. Remember, continuations can only be filed within six months of a Financing Statement’s lapse date.

Amending Your Most Recent Amendment: When a UCC3 is filed, that UCC3 is meant to amend the original UCC1 Financing Statement, not the latest UCC3 that has been filed. Always refer to the original UCC1 Financing Statement when filing a UCC-3 amendment.

Best Practices for Filing and Managing UCC-3 Amendments
When it comes to UCC-3 best practices, organization is key. Below are 5 best practices for filing and managing UCC-3 amendments.

  1. Regularly Review Your UCC Portfolio: Set up a systematic process to review your UCC portfolio on a regular basis. This allows you to identify potential updates or corrections needed for existing UCC filings. Utilizing an online UCC system like FICOSO Online makes portfolio review much easier by consolidating your entire portfolio in one secure location.
  2. Maintain Organized Records: Keep well-organized records of your UCC filings and corresponding UCC-3 amendments. This includes maintaining copies of the original UCC-1 financing statements, UCC-3 amendments, and any related documents. Having organized records facilitates efficient management and easy access when needed. Convenient on-demand reports in FICOSO Online keep pertinent portfolio activity top of mind.
  3. Establish a Monitoring System: Implement a reliable system to monitor expiration dates and renewal requirements of your UCC-1 filings. Missing renewal deadlines can result in a lapse of your security interest, potentially jeopardizing your position in case of debtor default. Utilize reminder tools or consider partnering with a real-time monitoring service like FCS’ Nationwide Monitoring Solutions for comprehensive tracking of liens, business entity data, bankruptcies or litigation.
  4. Timely Filing of UCC-3 Amendments: File UCC-3 amendments within a reasonable timeframe to maintain accuracy. Whether it’s updating debtor or secured party information, making collateral amendments, or recording assignments, ensure that amendments are filed as soon as possible to reflect changes promptly and avoid potential complications. You can use an online UCC service like FICOSO Online to receive timely alerts of when to file your UCC-3 continuations starting 6-months before your UCC-1 lapse date.
  5. Consult with UCC Experts: Seek legal advice or consult with UCC experts when dealing with complex or critical amendments. UCC regulations can be intricate, and professional guidance can help ensure compliance and maximize the effectiveness of your filings. Contact one of First Corporate Solutions’ dedicated UCC experts today with any UCC-related questions you may have.

A Final Word
UCC-3 filings are essential tools for Factors, providing the means to protect their interests, maintain security, and navigate the ever-changing landscape of commercial transactions.

By understanding the distinct types of UCC-3 filings and their significance – Factors can enhance their operational efficiency, mitigate risks, and assert their claims with confidence.

Embracing the power of UCC-3 filings empowers factoring companies to thrive in the dynamic world of commercial finance, fostering trust and reliability in their relationships with clients and partners.



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