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What are Corporate UCC Services and Why are They Important?

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Business people know their trade and how to run their businesses, but writing contracts is a different story. You may enter into lease agreements that involve risk mitigation and asset protection that is beyond your skill level. Corporate UCC services set the standards for commercial contracts.

What is UCC?

The Uniform Commercial Code (UCC) is a set of laws that guide state legislature in creating statutes concerning commercial contracts and related deals. This comes into play in commercial transactions, secured transactions; like loans, and negotiable instruments; like checks and banknotes. It strives to offer clarity and consistency between countries and states.

The uniform code provides stability for companies operating countrywide and internationally. It is so-called because it makes laws uniform across jurisdictions.

When Do Companies Require UCC Corporate Services?

There are several types of UCCs but the most common is the UCC-1, also known as a financing statement. A UCC filing statement is filed to let interested parties know that the creditor has a security interest in a debtor’s personal property. This is usually because the personal property is being used as collateral in a loan worked out between the two parties.

A UCC-1 does not have to be filed in every financial transaction. It only needs to be filed in transactions that are not immediately paid off and incur debt. So, it will be necessary for most major purchases like home and automobile purchases.

Why File a UCC?

The main benefit of filing a UCC is protection.

Even though you may be working with debtors that intend to repay you, you never know what may happen. They may encounter financial difficulties that prevent them from repaying you, or even filing for bankruptcy.

If your debtor files for bankruptcy, a UCC will ensure you are one of the creditors eligible for some form of repayment. Without a UCC, you may have to fight with the debtor to get your money back, and your chances of success will be slim.

How To File a UCC?

You must file a UCC with the secretary of state office in the state where your debtor is located. So, if your debtor is in New Jersey, you will need to file an NJ UCC. If they are in California, you will need to file and CA UCC.

If the collateral used in the loan is tangible, such as real estate or equipment, you should also file a UCC at the county recorder’s office in the county where the property is located.

Secretary of State websites will provide a UCC form and instructions on how to file. Most will allow you to file online. In rare cases, you may have to file by mail or in person.

There is a national UCC form that is valid for all U.S. locations, but some jurisdictions may require you to file a specific form instead of the national form. Be sure to fill out all information correctly to avoid complications.

What Do Corporate UCC Services Entail?

Businesses may be able to handle their own UCC duties, but UCC services can transform these simple tasks. A professional will fill out and file all paperwork to ensure it’s correct. They can also help manage your UCC portfolio.

As your business grows, you may be handling several loans that will become part of your UCC portfolio. You may struggle to keep up with filing continuations and organization. A specialist will help ensure your files are filled out accurately and will see to it that your NJ UCC contracts do not lapse.

How Long Do UCC Filings Last?

UCC filings last for five years. After the five years are up, the contract is no longer valid, and you will not have secured interest in the loan.

If the debtor still owes you money after the five years are up, you may file a continuation statement.  The statement must be filed within six months before the filing’s expiration date.

UCCs are necessary in ensuring you get repaid for your loans. A specialist will ensure all paperwork is filled and properly, and will renew documents to maintain your security interest.

Will you be seeking out UCC corporate services for your business?

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