Topic: Article 9 – Uniform Commercial Code
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When are we required to release a security interest on a titled vehicle if the same vehicle is used to secure multiple loans?
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We believe that you would not be required to release the certificate of title on a vehicle until all loans secured by the vehicle are fully satisfied (not just when one loan secured by the vehicle is satisfied). The Vehicle Code requires that you deliver a release of the security interest and the vehicle’s certificate…
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Do we need to record a new filing statement every time a debtor obtains new collateral if we already have a blanket filing statement?
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We believe that executing new security agreements and filing statements every time a debtor acquires new property (“after-acquired property”) is overkill. However, you must ensure that your security agreements and filing statements are structured to properly include collateral that the debtor acquires after the execution of the security agreement and the filing of the financing…
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Would a blanket filing statement covering “all equipment” include titled vehicles?
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We do not believe that your security interest in the debtor’s vehicles could be perfected by a UCC blanket financing statement. The general rule is that you must perfect a security interest with a financing statement (which can cover “all assets” or “all personal property” 810 ILCS 5/9-504(2)). 810 ILCS 5/9-310(a). However, a special rule…
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We have a loan officer who filled out a loan note for a commercial loan and entered “security agreement” as the collateral for the loan on the note. The underlying security agreement listed trucks and trailers as collateral. Is this sufficient to secure our loan?
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Whether the bank has a security interest in the vehicles depends on whether the bank has an enforceable security agreement under the UCC. As stated above, a security agreement is considered enforceable if the bank gave value to the borrower, the debtor has rights in the collateral, and the security agreement adequately describes the collateral.…
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If we made a loan secured by a vehicle title, and we release the lien on the vehicle’s title after it is paid off, do we need to again amend the vehicle’s title after making a new loan to the customer to reflect our lien on the vehicle?
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If the bank has an enforceable security agreement with the borrower, it has a security interest in the vehicle regardless of what the vehicle’s certificate of title states. However, the bank will not have a perfected security interest until the bank files for an amended certificate of title on the vehicle with the Secretary of…
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A convenience store is opening a line of credit secured by their inventory, fixtures, receivables, etc. We found a recorded purchase money UCC from one of their vendors. Do we need to provide some sort of notice to the vendor before or after filing our UCC? I also assume they have priority on their merchandise?
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A bank with a security interest as described above is not required to send notice of its security interest to a party with a prior recorded purchase-money security interest. You may be thinking of the requirement that a party with a purchase-money security interest must send notice to a prior inventory-secured party in order to…