UCC-1 filings explained: liens, searches and terminations

UCC filings are public, so any funder reviewing your business can see every one filed against it. What it finds, and how current those filings are, can change the offer you get. Here is how the filings work, how to find the ones against your business and how to clear the ones you have paid off.

What a UCC-1 is

Article 9 of the Uniform Commercial Code governs these filings. The California Secretary of State describes the UCC-1 as a filing made “to perfect a security interest in named collateral” that “establishes priority in case of debtor default or bankruptcy.”

A creditor needs your authorization to file one, but signing a security agreement counts as authorization for the collateral it describes. A filing generally stays effective for 5 years and then lapses, unless the secured party files a continuation in the 6 months before the lapse date.

Merchant cash advance funders file too. Article 9 covers sales of accounts as well as secured loans, and the SEC-filed MCA agreement we reviewed grants a security interest in all present and future accounts receivable and authorizes the funder to file UCC-1 forms. See UCC-1 in our glossary.

What a filing does and does not do

A UCC-1 does not prove that you owe money, and it does not let anyone take funds on its own. The rights come from the agreement you signed, and the filing publicizes them and sets their priority.

After a default, those rights can bite. Article 9 lets a secured party notify your customers, or anyone else who owes you money, to pay it directly. Once a customer receives that notice, paying you no longer discharges what it owes.

For a business that lives on receivables, that notice can cut off incoming payments. Our guide to MCA defaults covers the rest of a funder's options.

Blanket liens and specific collateral

Under Article 9, a financing statement can describe the collateral as “all assets” or “all personal property.” That is a blanket lien. A narrower filing describes a type of asset, such as accounts receivable, or a specific item, such as one machine identified by its serial number.

Read the collateral box on every filing against you. An equipment lender's filing and an MCA funder's all-assets filing look alike in a search list, but they mean very different things to the next funder.

Where UCC filings are made

Article 9 treats a registered organization, such as an LLC or corporation, as located in the state under whose law it was organized. A Delaware LLC that runs a restaurant in Ohio is searched in Delaware.

For a sole proprietor, the debtor is the individual, located at their principal residence. Filings go to a central state office, such as the New York Department of State or the California Secretary of State.

How to search your filings

1. Confirm your legal name and formation state. Use your articles of organization or incorporation, not your trade name.
2. Open that state's UCC search. In New York, the Department of State's online UCC search is free, and an official search costs $25.
3. Search the exact name, then close variations and any former names.
4. Record each filing: filing number and date, secured party, collateral description, lapse date and any amendments or terminations.
5. Save the results with the date you searched. You will want them when you apply or dispute a filing.

If you find a filing you do not recognize, match it against your contracts first. Then ask the secured party in writing which agreement it relates to.

Getting a UCC-1 terminated

Article 9 requires the secured party, within 20 days after it receives a signed demand from you, to send you a termination statement or file one when the filing should end. That covers a paid-off obligation with no commitment to lend more, sold receivables whose customers have paid, and a filing you never authorized.

If the secured party fails to do it, Article 9 lets you recover $500 in statutory damages plus any actual loss. Once a termination is filed, the financing statement stops being effective.

1. Get a payoff letter before you pay. It should state the exact amount and the date it is good through.
2. Pay and keep proof of the amount and date.
3. Send a signed, written demand for a UCC-3 termination to the secured party of record.
4. Check the state record after 20 days. In New York, a termination is a UCC-3 amendment with the termination box checked.
5. Follow up in writing if nothing has been filed, and bring in a lawyer if it still is not.

If the secured party still fails to act, Article 9 lets you file the termination yourself, as long as the UCC-3 states that the debtor authorized it. Because the filing is formal and public, a business attorney can prepare it.

When a filing is wrong

You can demand termination of a filing you never authorized, on the same 20-day clock. The filing office will not settle the dispute for you: the New York Department of State says it cannot remove wrongful filings.

You can file an information statement, Form UCC5 in New York, if you believe a record is inaccurate or was wrongfully filed. It adds your side to the record, but under Article 9 it does not remove the filing or change its effect.

Questions to ask before a funder files

• What will the collateral description say: receivables only, or all assets?
• Will you file the UCC-3 termination at payoff without waiting for my demand, and how quickly?
• Will you narrow or subordinate the filing if I later finance equipment or a vehicle?
• Who will be the secured party of record, and will that change if you sell or assign the agreement?
• If I pay early, will the termination follow the payoff, or wait for some later date?

Get the answers in the contract or in a signed side letter. A promise on a sales call does not bind anyone.

How liens affect future funding

Funders count your open advances from bank statements and UCC searches. Fenix Capital Funding, for example, publishes a limit of “No more than 4 existing positions” for its regular advances. A filing left over from an advance you paid off can make your file look more stacked than it is. Our guide to stacking risks explains how funders read positions.

Priority now matters for debits too. Under Texas's commercial sales-based financing law, effective September 1, 2025, a provider may set up automatic debits only if it holds a validly perfected, first-priority security interest in your deposit account.

The practical rule is simple. Search your own record before you apply, and terminate every filing you have already paid off.