In most states, a security interest in personal property which is or is to become a fixture is governed by the Uniform Commercial Code (UCC). A financing statement must be filed in order to perfect a security interest in fixtures. Lenders often file UCC-1 Financing Statements (for personal property) in addition to the mortgage securing the financing of the real property.
The UCC-1 Financing Statement is generally filed in two places:
• With the Secretary of State
• In the public land records of the county in which the property is located.
Part of the search and examination process is to verify that no unexpired UCC Financing Statements exist of record. The statute of limitations for such statements varies from state to state. Prior to the expiration date (usually 6 months prior to expiration) the UCC may be extended for an additional period of time. If the financing statement has expired by its own terms or by applicable law, then it should be considered to no longer exist. Additionally, if a review of the financing statement determines that only non-fixtures are included (such as computers, copiers, or inventory), then it does not affect real property.
The problem with locating some UCC Financing Statements is that not all states require the inclusion of the legal description of the property and, in some cases, the name of the debtor reflected on the statement is not that of the current record owner. At times, the only common link between the statement and the property being insured is the physical property address. Some states have amended the UCC requirements to include provisions for identifying such property.