Toolkit · Commercial

The Collateral Description, Lien Search, and Disposition Notice Toolkit

49 U.S.C. § 44107

Type
Toolkit
Jurisdiction
National
Date
2024-03-05
Topic
Commercial

This toolkit supplies the working documents of a secured transaction. It opens with collateral description clauses that satisfy the security agreement's stricter standard, and a debtor name verification form that forces the name to come from an identity document rather than a credit file. It provides a lien search request that reaches the federal registries and lien systems the uniform system does not cover, and an analysis worksheet for the results. It includes deposit account control agreement terms, a purchase-money inventory notification that preserves superpriority, and a continuation calendar. For enforcement it supplies a default and acceleration letter, a disposition notification built on the statutory safe harbor, and a deficiency calculation worksheet. It closes with intercreditor terms, a closing checklist, and the intake questions that establish position in one conversation.

The Collateral Description, Lien Search, and Disposition Notice Toolkit

Commercial > Secured Transactions, Collateral, and UCC Article 9 | Published 5 March 2024 - Updated 1 July 2026 | UpLaw - uplaw.us

Tool 1 — Collateral description clauses

⚠️ "All assets" is sufficient in a financing statement and insufficient in a security agreement. Use categories in the agreement and the broad indication in the filing.

Security agreement — grant

Debtor grants Secured Party a security interest in all of Debtor's right, title, and interest in and to the following, wherever located, whether now owned or hereafter acquired or arising:

(a) all accounts, health-care-insurance receivables, and payment intangibles; (b) all chattel paper, whether tangible or electronic; (c) all inventory; (d) all equipment, including all fixtures; (e) all instruments, including promissory notes; (f) all documents; (g) all general intangibles, including intellectual property, contract rights, and tax refunds; (h) all investment property; (i) all letter-of-credit rights and letters of credit; (j) all deposit accounts, with all funds credited thereto; (k) all money, cash, and cash equivalents; (l) all supporting obligations; (m) the commercial tort claims described on Schedule [ ] [list each claim specifically]; (n) all books and records relating to the foregoing; and (o) all proceeds and products of any of the foregoing, including insurance proceeds and claims against third parties.

☐ ⚠️ Commercial tort claims must be described specifically. A generic after-acquired clause does not reach them, and a claim arising after the agreement is not covered by a generic description. Amend the schedule when a claim arises. ☐ Consumer goods after-acquired limits observed where applicable ☐ ☐ Future advances clause included ☐ ☐ Authorization to file included ☐

Financing statement — indication of collateral

All assets of Debtor, whether now owned or hereafter acquired, and all proceeds thereof.

Tool 2 — Debtor name verification form

The name must come from a document, never from a credit file.

Debtor type Required source Obtained Copy in file
Registered organization Certified copy of the public organic record from the state of organization ☐ ☐
Individual Unexpired driver's license issued by the state of principal residence ☐ ☐
Trust Trust's organic record; settlor name where required ☐ ☐
Decedent's estate Letters testamentary or of administration ☐ ☐
Unregistered organization Organizational documents; individual partner names where required ☐ ☐

☐ Name transcribed exactly, including punctuation, spacing, suffixes, and abbreviations ☐ ☐ Trade names recorded separately for search purposes only ☐ Never sufficient for filing. ☐ Former names for the past [five] years recorded ☐ ☐ State of organization / principal residence recorded, and the filing office derived from it ☐ ☐ Driver's license expiration date calendared ☐ ☐ ⚠️ Standard: a filing that fails sufficiently to provide the name is seriously misleading and ineffective unless a search under the correct name, using the office's standard search logic, discloses it ☐ ☐ Post-filing search run under the exact correct name to confirm the filing appears ☐ Do this. It takes ten minutes and it is the only real test.

Tool 3 — Lien search request

Search instruction to the search agent

Debtor(s): [exact legal names, plus each former name for the past five years, plus trade names, plus predecessor entities from mergers].

Jurisdictions and offices:

  1. Central filing office in [state of organization / principal residence] for each debtor;
  2. Central filing offices in [each prior state of organization or residence within the past five years];
  3. Real property records in [each county where the debtor owns or leases real property] for fixture filings and as-extracted collateral;
  4. Federal tax lien records in each applicable office;
  5. State tax lien and judgment lien records;
  6. Litigation dockets, federal and state, in each county of operation;
  7. Federal aircraft registry, if any aircraft — 49 U.S.C. § 44107;
  8. Federal vessel documentation, if any vessels — 46 U.S.C. § 31321; 46 C.F.R. Part 67;
  9. Federal rolling stock recordation, if any — 49 U.S.C. § 11301; 49 C.F.R. Part 1180;
  10. Certificate of title agencies in each state where titled goods are registered;
  11. State central filing system for farm products, where applicable — 7 U.S.C. § 1631;
  12. Intellectual property recordation offices for security interests in registered marks, patents, and copyrights.

Deliverables: copies of every filing, with filing dates and numbers, plus a certification of the search parameters used.

☐ Bring-down search ordered for the day of closing ☐ ☐ Post-filing search ordered for two weeks after closing ☐

Tool 4 — Search results analysis worksheet

Filing no. Secured party Filed Lapses Collateral indicated Status Action
☐ to be paid ☐ to be terminated ☐ to be subordinated ☐ permitted

☐ Every filing accounted for; none left as "probably stale" ☐ A filing encumbers the record until terminated, whatever the lender says. ☐ Payoff letter obtained for each filing to be released ☐ Amount, wire instructions, and an express agreement to terminate on receipt ☐ ☐ Termination statements obtained before closing, or authorized terminations held in escrow ☐ ⚠️ Do not close on a promise. ☐ Subordination agreements executed where a filing is to remain ☐ ☐ Federal tax liens: filing date recorded ☐ Date lender obtained actual knowledge recorded ☐ ⚠️ Forty-five day rule under 26 U.S.C. § 6323; choateness under United States v. Security Trust & Savings Bank; insolvency priority under 31 U.S.C. § 3713. ☐ Federal receivables identified; assignment of claims package prepared — 31 U.S.C. § 3727; 41 U.S.C. § 6305; 31 U.S.C. § 9303; 31 C.F.R. Part 208; rule of decision United States v. Kimbell Foods, Inc. ☐ ☐ Aircraft transfers confirmed recorded — Philko Aviation, Inc. v. Shacket ☐ ☐ Depository relationships mapped for control agreements ☐ Institution failure exposure noted — 12 U.S.C. § 1821; 12 U.S.C. § 1823; 12 U.S.C. § 1825; 12 C.F.R. Part 7; 12 C.F.R. Part 9; 12 C.F.R. Part 1006 ☐ ☐ Securities characterization questions flagged — 15 U.S.C. § 78c; Gollust v. Mendell ☐

Tool 5 — Deposit account control agreement terms

⚠️ A security interest in a deposit account as original collateral can be perfected only by control. Filing accomplishes nothing, and the depositary bank has priority automatically.

☐ Parties: debtor, secured party, depositary bank. Every account at every institution. ☐ Control provision: the bank agrees to comply with instructions directed to disposition of funds originated by the secured party without further consent of the debtor. ☐ Blocked or springing. Springing control permits the debtor to operate the account until a notice of exclusive control is delivered; blocked control sweeps continuously. Choose deliberately and document why. ☐ Notice of exclusive control: form attached, delivery method specified, and the bank's response time stated in business days. ☐ Subordination: the bank subordinates its own security interest and setoff rights, except for returned items, chargebacks, and its ordinary fees. ☐ No other control agreements without the secured party's consent, and a representation that none exist. ☐ Account statements to the secured party. ☐ Termination only with the secured party's consent, and notice to the secured party if the bank resigns. ☐ Governing law and the bank's jurisdiction specified, since the bank's jurisdiction determines the perfection analysis. ☐ Parallel terms for securities account control agreements and for letter-of-credit rights. ☐ ⚠️ Cash proceeds of perfected inventory sitting in an uncontrolled account are exposed. This is the most common gap in an otherwise well-documented facility.

Tool 6 — Purchase-money inventory notification

⚠️ Superpriority in inventory requires perfection before the debtor receives possession AND advance written notification to prior filed secured parties. Missing the notice forfeits the superpriority entirely.

Notification of purchase-money security interest in inventory

To: [each secured party that has filed a financing statement covering the same types of inventory before the date of the undersigned's filing]

[Secured Party] has or expects to acquire a purchase-money security interest in inventory of [Debtor, exact legal name]. The inventory is described as: [description by type sufficient to identify it].

This notification is given pursuant to the purchase-money priority provisions of Article 9. [Secured Party] has filed a financing statement covering the described inventory on [date], file number [ ].

[Secured Party], [address], [contact].

☐ Sent to every secured party of record covering the same inventory type ☐ ☐ Sent before the debtor receives possession ☐ Proof of delivery retained ☐ ☐ Effective period tracked; a new notification is required after it expires ☐ ☐ Filing completed before possession ☐ ☐ For non-inventory goods: perfect within the grace period after possession; the interest relates back ☐ ☐ Livestock treated like inventory ☐ ☐ Incoming notifications from other lenders logged and evaluated against the facility's covenants ☐

Tool 7 — Continuation and monitoring calendar

Trigger Deadline Consequence of missing Owner Date Done
Filing lapse Continuation in the six months before the fifth anniversary ⚠️ Perfection lapses and is treated as never having existed against a purchaser ☐
Debtor name change Amend within four months as to later-acquired collateral Filing ineffective as to that collateral ☐
Debtor change of state Refile within four months Perfection lapses ☐
New debtor by merger Analyze promptly Filing may not reach the successor's assets ☐
New titled goods acquired Title notation on acquisition Unperfected ☐
Goods affixed to realty Fixture filing Mortgagee priority ☐
New deposit or securities account Control agreement Unperfected as to that account ☐
New federal receivable Assignment of claims package Government need not honor ☐
Federal tax lien re-search Periodic ⚠️ Forty-five day rule on advances ☐
Farm products season Notice or central filing before sale Buyer takes free ☐
Insurance renewal Loss payee endorsement No recovery on casualty ☐

☐ Calendar owned by a named person, not by a system nobody checks ☐ ☐ Reminders set at 12, 9, and 6 months before each lapse date ☐

Tool 8 — Default and acceleration letter

Notice of default and acceleration

To: [Debtor], and to [each guarantor]

Events of default have occurred and are continuing under the [Credit Agreement] dated [date]: [identify each default by section and describe the facts].

[If a cure period applies: The cure period under Section [ ] expired on [date] without cure.]

Secured Party hereby declares the entire unpaid principal balance of $[amount], together with accrued interest of $[amount], and all other obligations, immediately due and payable.

Secured Party reserves all rights and remedies, including the right to take possession of and dispose of the Collateral. No delay or omission in exercising any right constitutes a waiver, and Secured Party does not waive any existing or future default. Strict compliance with every term is required going forward, notwithstanding any prior course of dealing.

Demand is made for payment in full by [date]. Direct communications to [counsel].

☐ Every default identified by section ☐ ☐ Notice and cure provisions verified as satisfied ☐ ☐ ⚠️ Where late payments were accepted, a reinstatement-of-strict-compliance letter should precede acceleration by a reasonable interval. ☐ Guarantors noticed ☐ Subordinated creditors noticed if the intercreditor requires it ☐ ☐ Standstill period computed under any intercreditor agreement ☐ ☐ Bankruptcy risk assessed before acting — 11 U.S.C. § 362; 11 U.S.C. § 361; Butner v. United States ☐

Tool 9 — Disposition notification

Use the statutory safe harbor form. Vary nothing.

Notification of disposition of collateral

To: [Debtor]; [Secondary obligors]; [Other secured parties entitled to notice]

From: [Secured Party], [address], [phone]

[For a public disposition:] We will sell the [describe collateral] publicly to the highest qualified bidder on [date] at [time] at [place]. You may attend the sale and bring bidders if you want.

[For a private disposition:] We will sell the [describe collateral] privately sometime after [date].

You are entitled to an accounting of the unpaid indebtedness secured by the property we intend to sell. You may request an accounting by calling us at [phone].

[Where a deficiency may be sought:] You are liable for any deficiency remaining after the proceeds of the sale are applied.

☐ Recipients identified: debtor ☐ secondary obligors ☐ in non-consumer transactions, secured parties of record and those who notified ☐ ☐ Search for other secured parties run within the statutory window before notification ☐ ☐ Timing computed under the applicable rule ☐ Consumer-goods rules checked separately ☐ ☐ Proof of dispatch retained ☐ The statute requires sending, not receipt — but prove sending. ☐ Public versus private designation matches what will actually happen ☐ ⚠️ The secured party may bid at a public disposition; at a private one only for recognized-market or standard-price-quotation collateral. ☐ Advertising, condition, access, and timing documented to support commercial reasonableness ☐

Tool 10 — Deficiency calculation worksheet

Line Item Amount
1 Principal outstanding at disposition
2 Accrued interest
3 Late charges and default interest, if contractual
4 Reasonable expenses of retaking, holding, preparing, and disposing
5 Reasonable attorney fees, if contractual and permitted
6 Total obligation (1–5)
7 Gross disposition proceeds
8 Less: expenses already counted at line 4 (avoid double counting)
9 Net proceeds applied
10 Subordinate interests paid after demand
11 Surplus to debtor, if any
12 Deficiency (6 − 9)

☐ Compliance with notification and commercial reasonableness confirmed before asserting a deficiency ☐ ☐ ⚠️ If noncompliant: rebuttable presumption that the collateral equaled the obligation in non-consumer transactions ☐ absolute bar in some consumer jurisdictions ☐ ☐ Statutory minimum damages exposure computed for consumer-goods transactions ☐ ☐ Explanation of the calculation provided where required ☐ ☐ Accounting furnished on request ☐ ☐ Preference and avoidance exposure reviewed if bankruptcy is near — 11 U.S.C. § 547; 11 U.S.C. § 548; BFP v. Resolution Trust Corporation; Barnhill v. Johnson; Union Bank v. Wolas ☐

Tool 11 — Intercreditor term sheet

☐ Lien subordination and debt subordination addressed separately and expressly. ☐ Collateral definitions aligned across both facilities; no gaps and no undefined overlaps. ☐ Standstill: length, triggers, exceptions, and whether a new default restarts it. ☐ Enforcement control: who may act, on what notice, and whether the junior may join a sale process. ☐ Bankruptcy provisions: cash collateral objections under 11 U.S.C. § 363; priming financing under 11 U.S.C. § 364; plan voting; adequate protection allocation under 11 U.S.C. § 361; turnover of distributions; and claim allowance coordination under 11 U.S.C. § 502 and 11 U.S.C. § 506. ⚠️ Courts enforce many of these and decline to enforce waivers of rights the Code confers on creditors generally. ☐ Purchase option for the junior to buy the senior debt at par on default. ☐ Access and license rights where collateral sits on the other lender's property or requires licensed intellectual property to sell. ☐ Insurance, condemnation, and casualty proceeds allocation. ☐ Release mechanics on a permitted disposition. ☐ Amendment limits on the senior facility — caps on principal, rate increases, and maturity extensions. ☐ ⚠️ The most common failure is an agreement that allocates collateral rights meticulously and is silent on bankruptcy — the only scenario in which it will be read closely. Related authority to consider: Czyzewski v. Jevic Holding Corp.; Hartford Underwriters Insurance Co. v. Union Planters Bank, N.A.; Travelers Casualty and Surety Co. v. Pacific Gas and Electric Co.; Norwest Bank Worthington v. Ahlers; 11 U.S.C. § 1129; 11 U.S.C. § 1141.

Tool 12 — Closing checklist

☐ Credit agreement or note ☐ Security agreement with compliant description ☐ Guaranties and guarantor security agreements ☐ Pledge agreements ☐ Intellectual property security agreements for recordation ☐ Collateral schedule updated at closing ☐ ☐ Financing statements, every debtor, every office ☐ Fixture filings ☐ Title applications ☐ Federal registry filings ☐ ☐ Deposit and securities account control agreements ☐ Instruments and chattel paper delivered with endorsements ☐ ☐ Landlord waivers ☐ Bailee and warehouse acknowledgments ☐ Processor and consignee agreements ☐ Assignment of claims package ☐ ☐ Searches with certification ☐ Certified organic records ☐ Identity documents ☐ Payoff letters ☐ Terminations ☐ Insurance certificates with endorsements ☐ ☐ Legal opinions on attachment, perfection, and enforceability ☐ ⚠️ Read the assumptions; that is where the real risk was allocated. ☐ Closing binder ☐ Calendar of recurring dates ☐ Named owner for each obligation ☐ ☐ Post-filing search two weeks out, confirming every filing appears under the exact correct name ☐

Tool 13 — Intake questions

  1. What is the collateral, and what is its classification under Article 9?
  2. Has the interest attached — value, rights, and an authenticated agreement with a sufficient description?
  3. Is the debtor's exact legal name confirmed from an identity document?
  4. Where is the debtor located, and is that where the filing was made?
  5. When was the filing made relative to the security agreement, and relative to closing?
  6. When does it lapse, and is the continuation calendared?
  7. Has the debtor changed name, state, or structure?
  8. Is any collateral perfectible only by control, and were the agreements obtained?
  9. Is any collateral governed by a federal registry or a title statute?
  10. Is there a federal tax lien, and when did the lender learn of it?
  11. Are farm products involved, and was the notice regime satisfied — 7 U.S.C. § 1631?
  12. If this is a priority contest, who filed or perfected first, and does any superpriority apply?
  13. If bankruptcy is near, does the perfection timing survive 11 U.S.C. § 547 and 11 U.S.C. § 544, and what does 11 U.S.C. § 552 do to the collateral base?
  14. If enforcement has occurred, was every aspect commercially reasonable and was notification complete?
  15. Is there an intercreditor agreement, and what does it say about bankruptcy?

☐ ⚠️ Questions 3 and 4 decide more cases than the rest of the list combined.

Related Documents