Financing statement
Financing statement is basically a document that is filed with state officials for providing details about the personal property taken as collateral from the borrower for providing the loan.In United States, financing statements are filed by way of standard documents as prescribed at UCC or Uniform Commercial Code.Financing statements are filed with secretary of state or other such designated officials and are time stamped.The date of filing is also noted on these documents and each document filed is also assigned a number.This allows the lender to claim the collateral provided by the borrower.Before we proceed further, it is very necessary to understand the meaning of two terms.These are Continuation Statement and Perfected Lien.Continuation statement is basically an amendment made in the financing statement of borrower and extends the lien of lender on the collateral provided.The reader should note here that financing statement filed by the lender expires generally in 5 years as per the Uniform Commercial Code and for extending the lien, continuation statement has to be filed with the state officials.Similarly, Perfected Lien is filed by a lender to protect the collateral provided by the borrower from third party claims.The perfected lien statement is filed by the lender with the appropriate legal authority and the lien is noted by means of recording made in the mortgage deeds pertaining to public land records of municipality.
OTHER ASPECTS
There are different types of financing statements that are filed.National financing statement as prescribed by UCC is as simple and short document that is filed with a basic purpose of providing notice in an constructive manner about the interest of lender in the property of debtor or borrower.The reader should note here that it is not at all required by law that all the lenders that have secured their interests in the property of borrower file the UCC financing statements and it is generally done to get the necessary protection against the property of the borrower that has been held by the lender.So far getting the UCC documents for filing the financing statement is concerned, there are many types of software available in the market that allow a person to get the required documents for filing of financing statements.For example, Law Firm Software is a source in United States that provides software for generation of UCC documents for filing the financing statements.All the types of software available mimics the financial statements provided by UCC and so does software provided by this source.Mimic work is done with protection.The documents provided by this software and the screen are identical and a person can easily see the document he is typing.A person can also save the data sent on hard disk or in any type of external diskettes.There is no restriction on number of files that can be saved by computer.All UCC forms provided by this software can be filed electronically or manually and all forms are supplied by this software with built in print preview.It is important to note here that while purchasing such software, a person should take care that software provides latest UCC forms.This is because there are amendments that take place from time to time and if a person files the financing statements on obsolete formats, it is of no use.Last amendments were made in UCC financing statements on 22nd May, 2002.
The filing of financing statements establishes the necessary priority of lenders in case the borrower files for bankruptcy or in case of default.The lender that has filed the statement first is given the priority in liquidating the assets of the borrower kept as lien with different lenders.Form UCC1 is a financing statement that is filed by lender for securing the interest in the mentioned collateral of a person and also for establishing the priority of various lenders making claims against the asset of borrower.The reader must note that the Form UCC1 must be filed in the format strictly prescribed by Uniform Commercial Code.In the past, financing statements of people not filing in the prescribed formats have been categorically rejected.When a person submits a financing statement, he receives an acknowledgement copy automatically, which means that his statement has been accepted.If a person wishes to send request for the UCC1 form, he needs to send an additional copy of statement.Such copy should also be marked as Search Copy.
The financing statements differ from one state to another and thus, it is very much required that a person first confirms that he is making right type of submission with respect to financing statements.For example, in state of California, a person can submit the National Financing Statement as per UCC1 Rev 7/29/98 form and the National Financing Statement Addendum as per UCC1 Ad Rev.7/29/98 form.Similarly, other financing statements acceptable in state of California include the National Financing Statement Amendment Addendum UCC 3 Ad.Rev 7/29/98 form, National Financing Statement Amendment Additional Party UCC 3AP.Rev.5/22/02 form, Correction Statement UCC5 Rev.5/01/01 form and National Information Request UCC 11 Rev.6/13/01 form.
Various financing statements provide the information about the debtor-secured party relationship and the collateral that has been obtained by the lender.UCC1 is the form for recording the above relationship.If any change has been made in the information provided by way of UCC1, a person is required to file the UCC-3 form.This form alters that relations established before and reflects the current relationship.This statement also provides information about the maturity date of the statement, amendment of various conditions and the information filed in original statement.A person is also required to pay some fee on the transactions made and this fee may vary from one state to another.For example, in New Jersey, a person is required to pay a fee of $25 per transaction.If a person wishes to get the services in fast manner, he can pay additional $15 per transaction and services are provided in an expedited way in 8.5 business hours.
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