UCC-1 / Perfected Interest

November 3, 20212 min read
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A UCC-1 financing statement is a legal form that a creditor files to give notice that it has or may have an interest in the

The UCC-11 financing statement is regarded as a legal form that a creditor can file, allowing them to give notice that it may have an interest in the personal property of a debtor. Depending on the priority of debt involved, a creditor gives public notice that they have the right to possess and sell certain assets to debts owed by the debtor or borrower.

Filing a UCC-1 statement indicates the possession of certain securities by the creditor. This enables them to sell these assets to make the repayments of the debt owed to them.

What is Perfected Interest?

The perfected interest statement is used to outline the perfection of security interest and the rights to personal property. The creditor will in good faith use the perfected interest statement as a way to inform third parties about the perfection of interest on assets allocated as collateral.

Using perfected securities can assure the creditor that no other party will be able to claim the same type of collateral once the debtor has defaulted. The statement clearly outlines the collateral allocated to the creditor, and that those securities will be used to fulfill missed principal and interest payments of the loan.

Attachment under Article 9

Once a security interest has been imposed by a debtor, only then can the security interest attach once the following has occurred:

  • The value is given by the Secured Party.
  • Rights are appointed to the debtor considering the collateral.
  • Security interest within the collateral must have been appointed to the Secured Party.

Final considerations

A perfected interest statement is erected to offer a creditor a safety net on perfect collateral in the event a lender or debtor goes bankrupt. With this in mind, a specific creditor can file a perfected interest or securities statement on the rights to assets owed to a specific lender.