a man terminating a lien
ComplianceFinanceFebruary 21, 2017

Can a debtor terminate a UCC filing on themselves?

If you ever find yourself in that frustrating situation the answer is: Yes, you can, providing there is no existing obligation to the lender. This is provided for in Section 9-513 of the Uniform Commercial Code.

Here’s an interesting scenario that comes up more frequently than many people realize: A company (let’s call them ABC Inc.) enters into debt via a loan or lease with a vendor (let’s call them XYZ Services). XYZ Services properly files a UCC-1 covering the loan or lease to secure their assets.

A few months or years down the road, the loan or lease between the two is completed and the ABC Inc. has no further outstanding debt or liabilities with the secured vendor, XYZ Services. Nor does ABC Inc. plan to incur any in the future. ABC Inc. tries to contact someone at XYZ Services to request they file a UCC-3 termination on the now expired loan or lease, but they can’t find the right person, or that person refuses to help. Can ABC Inc., the debtor in this transaction, file a UCC-3 termination themselves on the now-completed lien?

If you ever find yourself in that frustrating situation the answer is: Yes, you can, providing this is no existing obligation to the lender. This is provided for in Section 9-513 of the Uniform Commercial Code.

First, the debtor must send an authenticated demand to the secured party. The demand should be sent to the name/address of the secured party as indicated on the financing statement. The secured party has 20 days to either terminate the filing or send a termination statement to the debtor that the debtor can then file. If this does not happen within the 20-day time frame, the debtor may file a UCC-3 termination statement.

Here is the official description of the requirements, as given in the Uniform Commercial Code, section 9-516:

9-516 (Official Comment 5)
5. Address for Secured Party of Record. Under subsection (b)(4) and section 9-520(a), the lack of a mailing address for the secured party of record requires the filing office to reject an initial financing statement. The failure to include an address for the secured party of record no longer renders a financing statement ineffective. See section 9-502(a). The function of the address is not to identify the secured party of record but rather to provide an address to which others can send required notifications, e.g., of a purchase-money security interest in inventory or of the disposition of collateral. Inasmuch as the address shown on a filed financing statement is an "address that is reasonable under the circumstances," a person required to send a notification to the secured party may satisfy the requirement by sending a notification to that address, even if the address is or becomes incorrect. See section 9-102 (definition of "send"). Similarly, because the address is "held out by (the secured party) as the place for receipt of such communications (i.e., communications relating to security interests)," the secured party is deemed to have received a notification delivered to that address. See section 1-201(26).</em>

Amanda Rasizzi of Lien Solutions
Director of Marketing
Amanda Rasizzi is Director of Marketing for Wolters Kluwer Lien Solutions. She oversees all marketing activities for the company. Rasizzi and her team communicate the company’s array of lien management, risk management, and life-of-loan solutions to prospects and clients, support the selling efforts of the Lien Solutions organization, and position the organization as an industry market leader.