As a lender, it’s in your best interest to perfect your stake in the borrower's assets. When your lien is on real estate, inventory, equipment, vehicles, or investments, the method of perfection is clear. But securing your interest in a fixture is less straightforward.
What is a fixture?
Each state has a different way of deciding if an object is a fixture. But, in general, the meaning of a fixture is something that was initially a piece of personal property and became part of real estate by being physically attached to that property.
Parties — and courts — look at numerous factors to determine if an object is attached enough to a property that it becomes a fixture, including:
- The degree to which the object is attached to the property;
- The ease with which someone could remove the object from the property;
- The intention of the parties; and
- A third-party’s reasonable expectations of the property.
Examples of fixtures
What does fixture mean in layman’s terms? Think of it as something that someone physically attached to real estate. Taking it away could damage the property or lower the property's value. Types of fixtures include:
- Items that are built into a property;
- Items that are bolted down;
- Things that are planted; and
- Objects other structures are built around.
Examples include walk-in freezers, central air conditioning units, garages, windows, and trees.
Common questions about UCC fixture filings
- What is a UCC filing? It’s a statement filed with a recording office that gives the public notice of your interest in an asset.
- Is a fixture filing a lien? Yes, a fixture filing creates a lien on the real property.
Fixture filings, filing on a fixture, or record of mortgage?
You can perfect an interest in a fixture in three ways, but the method of perfection determines whether you take priority over other creditors.
What is a fixture filing?
A fixture filing lien attaches to the real estate when you file a financing statement in the local real property records office. Potential property buyers who check UCC filings and other public records know your fixture lien takes priority over a preexisting mortgage. They have to satisfy your interest before they can complete the sale.
What is a filing on fixtures?
A filing on a fixture is a standard UCC-1 financing statement recorded with a secretary of state. It includes the fixture in the description of the collateral. It's important to know it doesn’t attach a lien to real estate; you have a subordinate interest to the property owner and other creditors.
What is a record of mortgage?
A record of the mortgage is not a UCC financing statement. But it can be effective as a fixture filing if you record it like you would a financial statement and meet certain UCC requirements. It also gives you priority over the property owner and other creditors.
UCC fixture filing expiration
Do UCC filings expire? It depends on the type of filing.
The UCC expiration for a financing statement, like a fixture filing, is five years. Extending a fixture filing requires filing a continuation statement within six months before the fifth anniversary. A record of mortgage never lapses.
Lien Solutions knows UCC fixture filings
Keeping track of UCC filing requirements for different assets is challenging. Lien Solutions helps navigate the complexities of fixture filings to secure your assets.