UCC Document Community

I've been lurking on this thread and wow, this has been incredibly educational! I'm fairly new to UCC filings and was making the exact same mistake as the original poster - trying to figure out how to handle personal guarantors in the debtor field. Reading through everyone's responses really drove home that the UCC debtor definition is purely about collateral ownership, not debt obligation. That's such a crucial distinction that I completely missed initially. I'm definitely going to start using that secretary of state business entity search before every filing - seems like such an obvious step but I never thought to verify the exact name formatting that way. Thanks to everyone who contributed to this discussion, you've probably saved me from multiple rejected filings!

Just wanted to chime in as someone who's been through this exact scenario! The confusion around UCC debtor definition with personal guarantors is so common. I used to work at a community bank and saw this mistake constantly. Here's the simple rule I always tell people: follow the money trail backwards from the collateral, not forwards from the loan. Who wrote the check to buy the equipment? Whose name is on the invoice? That's almost always your UCC debtor. In your case with ABC Manufacturing LLC, if they purchased the equipment (even if funded by your loan), then ABC Manufacturing LLC owns it and should be listed as the debtor. John Smith's personal guarantee protects your bank if the LLC defaults, but it doesn't change who owns the collateral. The SOS rejection was likely due to a name formatting issue - I'd bet money you either missed punctuation or used a slightly different version of the LLC name than what's in their official records. Pull up their certificate of formation and match it exactly, character for character.

Thanks everyone - this has been incredibly helpful! I think I understand now that the security agreement creates the lien and the UCC-1 perfects it for priority purposes. I'll definitely use the real estate analogy when explaining it to our borrower. And I'm going to look into that document verification tool mentioned earlier - sounds like it could save us some headaches down the road.

This thread really clarifies the distinction well! One additional tip for equipment financing - make sure you also consider whether any of your collateral might be considered "fixtures" that become part of real property. Manufacturing equipment that's permanently affixed to the building might need a fixture filing on the real estate records instead of (or in addition to) a regular UCC-1. I learned this lesson when we had a dispute over some industrial machinery that was bolted to the concrete floor. The real estate lender claimed it was part of their collateral as fixtures, while we thought our UCC-1 covered it as equipment. Always worth discussing with your attorney, especially for that $185k manufacturing equipment you mentioned.

One more tool that might help - I recently started using Certana.ai for UCC document checks and it's been a lifesaver. You can upload both the original UCC-1 and the termination document before filing to catch any mismatches. It immediately flags things like debtor name differences, incorrect filing numbers, or collateral description issues that could cause rejections. Much better than trying to manually compare everything, especially when you're under time pressure for a closing.

This whole situation highlights why solar financing UCC filings are such a pain point. I've seen this exact scenario play out multiple times. Here's what I'd recommend based on your situation: First, get Sunnova to commit in writing to filing the UCC-3 termination within 2 business days of receiving payoff funds. If they won't commit to that timeline, escalate to their legal department. Second, confirm with your title company whether they need to see the termination actually recorded or if they'll accept proof of electronic filing. Some title companies will close with confirmation that the filing was submitted electronically, knowing it takes 24-48 hours to show in the system. Third, consider asking your new lender about a simultaneous closing structure where both the payoff and new funding happen through escrow on the same day - this eliminates the timing gap that's causing your catch-22. The key is getting all three parties (Sunnova, new lender, title company) to agree on the exact sequence and timing before you get to closing day.

I'll add my perspective as someone who's dealt with this situation recently. Yes, your promissory note can absolutely function as a security agreement - I actually prefer this approach because it streamlines the documentation and reduces the chance of inconsistencies between separate documents. The language you described sounds sufficient, but I'd recommend having someone review it to ensure the granting language is crystal clear. One thing I learned the hard way is to make sure your collateral description is broad enough to cover future acquisitions if that's your intent - "all equipment now owned or hereafter acquired" can be much more protective than just "all equipment." Also, since you mentioned the collateral is located at a specific address, consider whether you want to limit it geographically or expand it to cover assets wherever located. The UCC doesn't require a specific location, so you have flexibility there depending on your risk tolerance and the borrower's business model.

As someone who's been doing secured transactions for about 5 years, I can confirm that promissory notes absolutely can serve as security agreements when they contain the right elements. The key is making sure your language is bulletproof - I always look for explicit granting language like "debtor grants lender a security interest in" rather than passive language like "secured by." Your collateral description sounds adequate, but given the great advice from Emma and others about future acquisitions and multiple locations, you might want to consider broadening it to "all equipment, inventory, and accounts receivable, now owned or hereafter acquired, wherever located" to give yourself maximum protection. I've found that being overly broad in the security agreement rarely causes issues, but being too narrow can definitely come back to bite you later. Also, since several people mentioned Certana.ai for document review, I can vouch for it - used it on a complex equipment financing deal last month and it caught some subtle language issues that could have been problematic. Worth the small cost for peace of mind, especially on larger deals.

The bottom line with bailment ucc issues is that it really depends on the specific terms of your arrangement. If there's any doubt, it's usually better to err on the side of filing. The UCC system is designed to handle these kinds of situations, even if they're not perfectly clear-cut.

I've dealt with similar bailment situations and one thing that might help is to get a written opinion from the equipment owner's attorney about whether they believe a security interest exists under your specific arrangement. Sometimes having that documentation can satisfy lenders even if you decide not to file a UCC-1. Also, make sure your bailment agreement clearly states the nature of the arrangement and whether the equipment secures any obligations - this can help clarify things for future reference and any potential disputes.