Did you know that following the filing of your financing statement, there are key events that could put your perfection and priority at risk? Because there is always a gap between the through date of an initial UCC search and the filing date of your filing, it’s important to run a post-closing search to make sure another secured creditor didn’t beat you to the front of the line.
This search to reflect is also an opportunity to verify that your financing statement was indexed correctly by the filing office, which is crucial to the perfection of a security interest.
If a transaction also involves an interest in after-acquired collateral, you’ll want to do more than just one post-closing UCC search. In order to maintain perfection, secured parties need to search their debtor’s corporate records regularly. If an entity debtor files a name change amendment in the public record, secured parties have only months to amend their financing statement before they become at risk of losing priority in after-acquired collateral. The same risks apply if a debtor re-organizes in a different state. Setting up recurring searches to monitor the corporate records should be standard practice for asset based lenders and factors dealing with revolving assets.