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Risk Management Blog

UCC & Corporate Due Diligence

Resource Guide for Legal and Financial Professionals

Why Name Variations Matter in UCC Searching


In previous blog posts we have talked about the importance of a secured party listing the correct debtor name on their UCC1 Financing Statement. Remember, a UCC filing is only effective if it gets the debtor name right. A UCC filing that fails to properly identify the debtor by their exact legal name will not offer the secured party priority status to collect should the debtor default or file for bankruptcy. It is dangerous, however to apply the same “exact name” philosophy to UCC searching. When performing UCC searches, it’s a good idea to include name variations (aka similar names) in your search effort.

Here’s why:

Locating Tax Liens
Many state filing offices maintain tax lien records in addition to UCCs. In some cases, the tax liens are housed on the same index as UCC filings. The problem with that is that while UCC filers must endure strict scrutiny of their debtor names, the IRS is not held to the same standard when filing a Notice of Federal Tax Lien. In several key cases, the courts have favored the IRS over a secured creditor even though the IRS has not used the exact legal name of the taxpayer on the Notice. A search that includes name variations would help locate Federal Tax Liens that have imprecisely named the debtor.

Indexing Errors
A search to include name variations can also uncover UCC filings that have been mis-indexed at the filing office. Once a document is accepted for filing, the pertinent filing information is abstracted from the document and input into the state’s searchable index. The indexing of filings is a largely manual process and mistakes happen. Consider a UCC record that gets the debtor name right, but is misspelled on the state’s UCC index – this document will not be located using an exact name search even though it may be an active, perfected financing statement.

To reveal name variations, try using private online search system that offers broad-based name searching options such as wildcard characters and stem/truncated search logic. These features are designed specifically to help locate critical filings that might be missed using an exact name search methodology.