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ARTICLE · 02 FEBRUARY 2015

Mistakes And Regrets: UCC Filing Error Terminates Security Interest

Blank Rome LLP
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When a secured loan is being paid off, lenders routinely authorize the borrower’s counsel to prepare and file UCC termination statements releasing the lender’s security interest in the borrower’s property.

United StatesInsolvency/Bankruptcy/Re-Structuring
Rick Antonoff
Rick Antonoff
Regina Kelbon
Regina Kelbon

Action Item: When a secured loan is being paid off, lenders routinely authorize the borrower's counsel to prepare and file UCC termination statements releasing the lender's security interest in the borrower's property. Lenders and their counsel must carefully review the documents before authorizing the borrower to file them to ensure they match up only with the security interests related to the loan being paid and that are intended to be released. If the termination documents include security interests related to other obligations and that are not intended to be released, the lender can lose its security interest and become an unsecured creditor with respect to those other obligations.

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