In the financial world, there is always work to be done to maintain healthy portfolios and keep the financial institution operating effectively. If you’ve filed a UCC-1 to secure interest or collateral, then you might also be aware that amendments, continuations, and terminations may need to be filed to protect your interest in the original lien. That’s where a UCC-3 comes in.
What is a UCC-3 used for?
If you’ve ever asked yourself what a UCC-3 lien is, then we’re here to help give you answers.
UCC filings are financial statements that are filed to give notice to other creditors of your security interest in a lien. A UCC-3 is used as a way to amend that original lien filing and do things like terminate the UCC, edit any of the details of the lien, or assign your interests to another secured party for the lien.
Common reasons why an entity would file a UCC-3
UCC-3s are used in a variety of transactions and are a key part of the life cycle of a loan. They help you secure your assets and ensure that the details of a UCC are accurate. There are many reasons why entities want to file UCC-3s.
UCC-3s can be used to extend the life of a loan beyond its original five-year lifespan. Financial institutions can also use a UCC to edit the details of their lien if a debtor's name or address changes. A UCC-3 can also be used to add new secured parties or change the collateral in the original UCC to more accurately reflect the current state of the loan.
Types of UCC-3 filings
A UCC-3 filing is a term that covers many different types of filing. After all, a UCC-3 is defined as a filing used to make any changes to a UCC-1 filing, including either continuing or terminating the original UCC lien filing. Put another way, UCC-3s are amendment filings to the original UCC financing statement, and there are five different types of UCC-3 filings:
- UCC-3 continuation: A UCC-3 continuation is a type of filing that extends the life of the financial statement by another five years.
- UCC-3 party amendments: A UCC-3 amendment is a type of filing used to change or add critical information about the debtor or the secured party. For example, they can be used to change the name or the address.
- UCC-3 collateral amendments: This type of filing is used to add collateral, remove collateral, or restate the entire collateral description. Prior to the UCC RA9, collateral amendments were also called “releases”.
- UCC-3 assignments: This type of filing is used to transfer rights in a filing from one secured party to another. There are both “partial” and “full” assignments.
- UCC-3 terminations: A UCC-3 termination is used to extinguish the lien before its five-year term has ended.