ComplianceFinanceJuly 13, 2022

What is a secured party?

When creating liens, or legal claims against different assets typically used as collateral in a debt, there are many things to consider. One question to consider is what is a UCC lien? A UCC lien is a common type of filing for debt. UCC stands for Uniform Commercial Code and is a set of laws that concerns commercial transactions. It covers things like secured transactions and security interests. It also governs the negotiable instruments or specialized documents that guarantee payment. 

There are also several parties that have a role in the creation and filing of a UCC-1, including the creditor — the person lending the money, and the debtor — the person borrowing the money. These roles need to be set in order for the loan to be created in the first place. There also needs to be a party that has a security interest in the financing statement. This secured party needs to have their assets protected in the loan so they don't end up losing money or property on the deal.

But what exactly is a secured party? What role do they play in the creating, filing, and extension of UCC filings? In this article, we’ll help you understand these questions and give you some advice on why you should consider partnering with experts when it comes time to file and secure your lien assets. 

What makes someone a secured party?

To put it in simple terms, the secured party is the creditor on the UCC loan. The creditor is the secured party because they have a financial interest in the collateral which the lien is on. Because they are putting forth the resources in the loans, their investment needs to be protected so that they don’t end up losing out on the loan if payments can’t be made or if the debtor reneges on the loan. 

What is a secured party on a lien?

A secured party in UCC law is a person who has the favor of the security interest that is created or provided for under a security agreement, whether or not there is an obligation to be secured that is outstanding. That could include someone who holds an agricultural lien, a consignor, or the person who has been sold accounts, chattel paper, promissory notes, or payment intangibles. It could also be a trustee, indenture trustee, collateral agent, regular agent, or other representative. 

A secured party is necessary for a UCC, as they have the interest that needs to be secured in the loan. Their investment and resources need to be protected, so making sure that assets are clearly stated in the UCC filing and that the proper steps have been taken is key to keeping the public record accurate and in the best interests of all parties. 

How partnering with an expert can help you file and secure your assets throughout the lifecycle of a loan

Filing a UCC isn’t an easy task. Partnering with a lien expert can help you make sure that your UCC filings are filed correctly and that your assets are secured throughout the entire lifecycle of the loan, even if it needs to be extended or edited in any way. At Wolters Kluwer Lien Solutions, we are the UCC filing experts. We can help you ensure that your interests are secured and that the lien is beneficial to all parties. Contact us to learn more about how we can help support you and help your lending institution grow.


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