1. Home
  2. Knowledge Base
  3. UCC-1 Statement – Definition

UCC-1 Statement – Definition

UCC-1 Statement Definition

A UCC-1 statement is a legal form or document that allows a creditor lay claim on the property of a debtor in a business loan. It is a form of lien that the creditor obtains as security for the business loan being offered. In law, a lien is the right that a lender has to possess a borrower’s property until the debt is repaid.

Creditors file UCC-1 statements to claim collateral for a business loan, it can be filled for all sorts of assets. The provision of UCC-1 is contained in the Uniform Commercial Code (UCC).

A Little More on What is a UCC-1 Statement

Once a creditor files a UCC-1 statement, it is a notification that he wants to use the borrower’s property as collateral for the loan issued. This statement is a form of lien placed on properties to guarantee the security of a loan. There are procedures that creditors must adhere to when filing a UCC-1 statement, there are requirements for the statement to be valid.

Uniform Commercial Code

In the United States, in order to regulate business loans and activities of creditors and debtors in loan arrangements, the UCC-1 statement was crafted. The Uniform Commercial Code developed the UCC-1 statement. The code monitors and regulates the activities that business engage in touching on loan or debt transactions. There are nine articles in UCC and the provision for UCC-1 statement is covered in article 9.

UCC-1 Components and Considerations

UCC-1 statements can be filed on any asset, but some types of assets are used more often than others. For example, inventory, vehicles, equipment and machinery and properties are often used in UCC-1 statements.  it is a form of collateral that a creditor possesses in a business loan.

The requirements for filing a UCC-1 statement are that details about the borrower and assets used must be included in the statement before it is filed and submitted to the appropriate agency. The processes entailed in filing a UCC-1 statement are similar to those in other liens. A UCC-1 statement is ineffective until the creditor includes it in the loan contract.

Specific Collateral Lien

There are two classifications of UCC-1, they are a specific collateral lien and a blanket lien. In a specific collateral lien, the lender has the right to possess the property purchased with the borrowed funds. Specific collateral lien is commonly applicable in real estate transactions where a borrower gets fund to purchase a real estate property. In this lien, the property purchased carries the lien.

Blanket Lien

In a blanket lien, a borrower has the choice to select the categories of assets that can be secured by the lender in a situation where the borrower fails to make payment. This means the creditor has the right to possess an amount of assets as specified by the borrower. The types of assets will also be included in the contract terms and include in the UCC-1 statement under collateral.

References for “UCC-1 Statement

Academic research for “UCC-1 Statement

Good faith performance and commercial reasonableness under the Uniform Commercial Code, Farnsworth, E. A. (1962). Good faith performance and commercial reasonableness under the Uniform Commercial Code. U. Chi. L. Rev., 30, 666.

Analysis of Marketing Strategies and Advanced Retail Sales Processes to Improve Company A’s Position in the Segment, Rouse, T. (2018). Analysis of Marketing Strategies and Advanced Retail Sales Processes to Improve Company A’s Position in the Segment (Doctoral dissertation, Kansas State University).

A Comment on the jurisprudence of the Uniform Commercial Code, Danzig, R. (1974). A Comment on the jurisprudence of the Uniform Commercial Code. Stan L. Rev., 27, 621.

Proceeds Under the Uniform Commercial Code, Henson, R. D. (1965). Proceeds Under the Uniform Commercial Code. Colum. L. Rev., 65, 232.

Trade Usage and Custom Under the Common Law and the Uniform Commercial Code, Levie, J. H. (1965). Trade Usage and Custom Under the Common Law and the Uniform Commercial Code. NYUL Rev., 40, 1101.

The Proposed Uniform Commercial Code Should Not Be Adopted, Beutel, F. K. (1952). The Proposed Uniform Commercial Code Should Not Be Adopted. Yale LJ, 61, 334.

Some Comments on the Comments to the Uniform Commercial Code, Skilton, R. H. (1966). Some Comments on the Comments to the Uniform Commercial Code. Wis. L. Rev., 597.

Buyer-secured party conflicts under section 9-307 (1) of the uniform commercial code, Dugan, R. (1974). Buyer-secured party conflicts under section 9-307 (1) of the uniform commercial code. U. Colo. L. Rev., 46, 333.

Cutting Off Claims of Ownership Under the Uniform Commercial Code, Warren, W. D. (1962). Cutting Off Claims of Ownership Under the Uniform Commercial Code. U. Chi. L. Rev., 30, 469.

Was this article helpful?