What to Do If a Lender Files an Incorrect UCC

When a lender or secured party files an incorrect UCC financing statement, it can trigger serious consequences for both the debtor and the creditor. In this blog post we’ll walk through exactly what to do if a lender files an incorrect UCC, exploring your options, required steps, risk mitigation, and how to set things right.

Why an Incorrect UCC Filing Matters

A “UCC” filing typically refers to a Uniform Commercial Code financing statement (often Form UCC-1) filed in the public record to show that a creditor has a security interest in a debtor’s personal property. 

When that filing is incorrect — such as wrong debtor name, wrong collateral description, wrong jurisdiction, or even unauthorized filing — the consequences can include:

• A creditor losing priority or perfection of its security interest. 

• A debtor appearing to have a lien or claim against their assets when they don’t (which can harm financing, sales, valuation) Wolters Kluwer

• Additional legal liability or disputes between parties.

Because of these risks, it’s essential to know both rights and required steps when you discover that a lender has filed an incorrect UCC.

Common Types of Incorrect UCC Filings

Here are several typical errors in UCC filings that can cause major problems:

• Misspelled or wrong debtor name: If the debtor’s name doesn’t match the legal entity name or the search algorithm fails to identify it, the filing can be seriously misleading. Business Lawyers Blog

• Wrong secured party or creditor name / address: Errors here may make the UCC less enforceable.

• Incorrect collateral description: Oversized or vague descriptions like “all assets” may render the filing too broad or contestable.

• Filing in wrong jurisdiction or wrong office: The filing may be invalid if it’s in the wrong state or wrong division.

• Unauthorized or fraudulent filing: A party files a UCC without debtor’s authorization, causing reputational or financing harm. 

Recognizing the specific type of error is your first step toward remedy.

What to Do If You Discover a Lender’s Incorrect UCC Filing

When you realise a lender has filed an incorrect UCC, follow these steps to protect your interests:

Step 1: Review the Filing

• Obtain a copy of the filed UCC statement from the public records (usually the Secretary of State in the relevant jurisdiction).

• Check the following details:

  • Debtor name (matches exactly your legal name or entity name)

  • Secured party name and address

  • Collateral description

  • Filing jurisdiction and office

  • Whether the filing appears authorised or makes sense in context

• Document any discrepancies or errors.

Step 2: Assess the Impact

• Determine whether the incorrect filing is causing or could cause harm (e.g., blocking you from obtaining credit, confusing lenders, appearing on title searches).

• Assess the creditor’s priority and whether the error might render their security interest imperfect or void. 

• If you are the debtor and you suspect the filing is unauthorized, recognise the potential damage to your business or credit. Wolters Kluwer

Step 3: Contact the Lender/Secured Party

• Reach out to the lender or secured party and point out the error.

• Request that they file a proper amendment (often a UCC-3 or termination statement) to correct or remove the incorrect filing.

• Get confirmations in writing for your records.

Step 4: File Correction, Termination or Information Statement

Depending on the situation:

• If the secured party agrees to fix things, they file a termination statement (UCC-3 termination) or an amendment (UCC-3) to correct details.

• If the filing is unauthorized: You may file an information statement (sometimes called a UCC-5) indicating the statement was unauthorized/erroneous. Wolters Kluwer

• Keep track of deadlines and ensure the corrected filing shows up in the public record.

Step 5: Consider Legal Remedies

• If the secured party refuses to correct the filing, or the filing is fraudulent, you may need to bring a legal action for declaratory relief, removal of the filing, or in some cases damages. 

• Work with a qualified attorney experienced in UCC filings, security interests, and lien removals.

Step 6: Monitor and Maintain Records

• Once the issue is resolved, monitor the public UCC record to ensure the correction/termination appears.

• Retain all correspondence, proof of filings, and notices in your file.

• Set up alerts or periodic checks if you have business or property interests at risk of being encumbered.

Quick-Action List

Here is a concise list of what to do if a lender files an incorrect UCC:

1. Obtain a copy of the filing and check for errors.

2. Evaluate the harm or risk caused by the incorrect filing.

3. Contact the lender and request correction or termination.

4. File your own information statement or bring legal action if needed.

5. Monitor the public record to ensure the correction is entered.

Why Acting Quickly Matters

Time is often of the essence when dealing with incorrect UCC filings because:

• Public records searches by lenders, buyers, or business partners may yield the erroneous lien and damage your reputation or financing access.

• In the case of a creditor, a filing error might result in loss of perfection or priority, potentially making the whole security interest void or subordinated. 

• Delay may make it harder to reverse or mitigate the damage, and may complicate legal action.

Debtor Perspective: How an Incorrect Filing Affects You

If you are the debtor (or your business is named as the debtor on an incorrect filing), you should be aware of the following implications:

• Your creditworthiness may suffer if third parties believe you are subject to a lien or security interest that you don’t owe.

• Financing or asset sales may be delayed or blocked because of the filing in your name.

• You may need to spend legal time and expense to clear the record.

• Even when you are not at fault, you remain proactive in monitoring filings under your name.

Creditor/Lender Perspective: Risks of Filing Incorrectly

If you are a lender or secured party, filing incorrectly can expose you to:

• Loss of priority or inability to enforce your security interest. Lowenstein Sandler

• Having a lien avoided in bankruptcy or trustee action because the filing was “seriously misleading.” Business Lawyers Blog

• Legal exposure if your improper filing causes harm to the debtor (fraud, unauthorized filings). 

• Reputation loss or compliance issues (especially for regulated lenders).

Thus, accuracy and careful compliance are essential from the outset. 

Best Practices to Prevent Incorrect UCC Filings

Whether you’re a debtor or creditor, here are preventive best practices:

• Verify exact legal entity name: Use the state Secretary of State database to confirm spelling, punctuation, suffix (LLC, Inc) etc.

• Proper collateral description: Avoid overly vague phrases; describe the assets clearly.

• File in correct jurisdiction: For business entities, typically the state of organization; for individuals the state of residence. Wolters Kluwer

• Use standardized search logic: Prior to filing, test how the system locates your debtor name to avoid “seriously misleading” issues. 

• Monitor post-filing events: Name changes, entity mergers, relocations can all trigger the need for an amendment. CSC

• Maintain filing records and set calendar reminders for continuation statements, expirations, or corrections.

When Legal Advice Is Essential

While many incorrect UCC filings can be resolved through mutual correction, certain situations justify early legal consultation:

• The filing appears fraudulent or unauthorized (you did not owe the debt). Wolters Kluwer

• You are a creditor and the error may cause you to lose your security interest or priority. Lowenstein Sandler

• The incorrect filing is causing significant harm — e.g., blocking a transaction, hindering financing, or triggering litigation.

• Complex collateral structure, cross-jurisdiction issues or multi-state filings are involved.

In such cases, a UCC-savvy attorney can guide you through corrective filings, potential damages claims, or regulatory implications.

How to Integrate This Into Your Business Workflow

Here are actionable steps you can take immediately:

• Perform a UCC search for your entity name (or personal name if you’re an individual debtor) in your state and any states where you have operations.

• If you’re a creditor, review all your active UCC filings and check for accuracy in names, descriptions and jurisdiction.

• Implement a checklist or SOP for UCC filings in your organization: verifying entity names, collateral description, jurisdiction, filing office.

• For any discovered incorrect filing, initiate the review and corrective steps outlined above (review, contact party, file correction, monitor).

• Set up periodic audits (annually or semi-annually) of your UCC filings/records to catch changes or errors early.

Summary & Key Takeaways

If a lender files an incorrect UCC, the steps you must follow are clear: review the filing, assess the impact, contact the secured party, file corrections or information statements as needed, monitor the public record, and engage legal counsel when necessary. For creditors, accuracy in filing is essential to preserving perfection and priority; for debtors, vigilance protects your reputation and financing flexibility. By acting quickly and following the process above, you can resolve the issue before it becomes a costly problem.