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How do you file a UCC lien?

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Quick Answer

To file a UCC lien, obtain a financing statement from the secretary of state in the state where you plan to file. Complete and file the form in accordance with the rules set out in the state's Uniform Commercial Code, according to Godfrey & Kahn.

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Full Answer

A secured transaction is an arrangement where a seller who sells items on credit retains the right to repossess those items, or some other collateral, if the buyer defaults and does not pay, according to Nolo. Two parties may enter into a secured transaction without filing a UCC lien, but the parties must agree that the seller of the goods retains an interest in the collateral, explains Nolo. However, under the Uniform Commercial Code, the seller is not fully protected in a secured transaction until he files a UCC lien, perfecting his interest in the goods.

If the seller doesn't perfect his interest by filing a UCC lien, other parties, such as another creditor or the trustee in bankruptcy, can claim the same collateral if the buyer becomes insolvent, explains Nolo. By filing a UCC lien, the seller gains priority over anyone else regarding the goods or other collateral that are the subject of the security agreement.

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