UCC Financing Statement

A furniture company allows a family to finance new living-room furniture over a period of one year. How can the company protect its interests until the furniture is paid off? By filing a UCC (Uniform Commercial Code) financing statement.

While the furniture is still fairly new, the family decides to sell it. They assure potential buyers that the furniture is paid off. How can buyers be sure that nothing is owing? By checking the UCC financing statements.

Convinced that the furniture is free and clear of liens, a young couple agrees to the price the family asks. The only problem is that the couple cannot pay the whole amount at one time. After discussing the matter, the family agrees to accept payments. Despite getting a signed and notarized bill of sale, they are still uneasy about the arrangement. Is there anything more they can do to protect themselves? Yes -- they, too, can file a UCC financing statement.

There are three types of UCC financing statements: UCC1, UCC2, and UCC3. UCC1 and UCC2 are used to show that there is a lien on property. "Property" refers not only to land, but also to vehicles or any type of equipment or personal property, such as furniture, tractors, etc, that has been financed. The UCC3 statement is used when there is a change in the UCC1, such as a release (cancellation), partial or complete assignment of lien, amendment, or termination of the loan. Anybody wanting to record a financial statement cancellation may request the appropriate forms from the office of the Clerk of Court.

Although it is not a requirement by law that a UCC be filed, doing so can be protection for both lien holders and prospective buyers, as can be seen by the examples above. Most financing statements are filed in the office of the Clerk of Court in the county where the debtor lives. However, since they may legally be filed in any county in Georgia, how can a buyer check all of the financing statements? Does he/she have to go to every county in Georgia?  Fortunately, no. All financing statements, no matter where they are filed and recorded in Georgia, are scanned into a statewide database that is accessible via a publicly available computer link in the Clerk of Court's office. The database may be searched using the name of an individual or business.

There are some things to keep in mind when searching the UCC financing statements:

  • Search by the property owner's name, whether individual or business.
  • If a statement is found, make sure it refers to the property you are interested in. There is usually a description of the property, including serial numbers (if applicable), on the statement.
  • Verify that the lien is/is not paid off by checking to see if a UCC3 (specifically showing termination of the loan) has been filed for that piece of property.
  • Important: Remember that just because the loan being searched for has been paid off, there is no guarantee that all loans against that piece of property have been paid in full. Most businesses file financing statements; but again, it is not a requirement.

Staff members of the office of the Clerk of Court are available to answer questions about financing statements or to provide UCC forms. However, they cannot provide legal advice or help in filling out the forms.