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UCC & Corporate Due Diligence

Resource Guide for Legal and Financial Professionals

When is a Terminated UCC Record not Really Terminated?


One of the basic tenets of the Uniform Commercial Code holds that a terminated UCC filing ceases to be effective.

So how can a terminated UCC not really be terminated? There are two scenarios.

Scernario 1: When the UCC record contains more than one secured party of record.
Under the Uniform Commercial Code, when multiple secured parties exist for a single UCC record, a single secured party can act as representative and file a termination statement on behalf of all secured parties. In doing so, it could effectively terminate the entire claim against the collateral. Alternatively, the termination could mean that the filing party sought to terminate only their own interest in the collateral, in which case the financing statement would remain effective for all other secured parties of record.

There is no note in the public record, on either the termination document or the index, to distinguish between the two scenarios outlined above. When reviewing a UCC search result, if you encounter a termination statement for a UCC filing with multiple secured parties, it is a good idea to contact the secured party that filed the termination to confirm the scope of their termination filing.

Scenario 2: When the Termination is filed without proper authorization.
According to the Uniform Commercial Code, a termination statement is only effective when filed by a party with the authority to do so. Usually this refers to the secured party of record, though in certain situations a debtor can file an authorized termination.

Sometimes a party other than a secured party of record or an authorized debtor will file a termination statement. Maybe a careless UCC filer put the wrong original filing number of their document and terminated the filing in error, or perhaps the debtor filed an unauthorized termination in an effort to unencumber the collateral. Whatever the reason for its filing, an unauthorized termination does not change effectiveness of a UCC Financing Statement.

There is no way to tell from looking at a UCC termination statement or a UCC search result whether a termination was filed with proper authority. Again, the searcher will need to follow up with the secured party to determine the true status of the claim.

Additional Resources

  • Handling Accidentally Lapsed UCC Financing Statements
  • Tackling Fraudulently Filed Termination Statements