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UCC & Corporate Due Diligence

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Why Should You Cast a Wide Net When Performing Your UCC Lien Search?

April 23, 2015 UCC, Due Diligence

This is a question we face all the time when discussing our search methodology with customers and other interested parties. What does casting a wide net even mean in this context?

Essentially, it means performing a search so that broad based results are produced, not narrow ones. That might seem counter intuitive since secured parties are required to file their UCCs with the exact legal names of entities and individuals as debtors, but the fact is that one cannot perform a thorough lien search unless this approach is taken.

Here’s why.

Not all liens are filed under the same debtor name rules as found in the Uniform Commercial Code; Federal and State taxing agencies are not required to follow the rules found in Revised Article 9 of the Uniform Commercial Code, for example, and neither are Judgment lien filers.

Therefore, it is important to conduct your debtor name searches in a way to uncover name variations in a particular index since they do exist and they can potentially affect your perfected security interest. That’s why we always say that a general rule of thumb for good business practice in performing a UCC Lien Search is to cast a wide net.

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