Once your debt is paid, you can clear the assets listed for collateral from a UCC lien so that you can sell them, use them as collateral for another small business loan, or retake full ownership. Having the assets removed is a matter of certifying that a third party does not have a claim on your asset and removing fraudulent claims if someone filed a UCC lien against your company without you knowing.
Each state has an online portal to run UCC lien searches yourself, but to get an officially certified search, you’ll need to contact your Secretary of State’s office for their pricing and process to run a UCC-11 certified search. This will give you an official document showing that your asset is clear.
If the search shows that there’s still a lien after you’ve settled the debt, the 5-step process later in this article guides you through the steps to have the lender remove it or get it done yourself if they’re not cooperative.
Certified UCC Searches
Certified searches provide an official document from your Secretary of State that shows whether your asset is clear of any active liens.
Pro-tip: UCC liens for real estate and assets (like solar panels that are attached to real estate) will be at the county recorder’s office where the real estate is located instead of the Secretary of State.
Most lenders won’t need this for business loan applications since they’ll do the search themselves, but coming prepared with the official document sets you apart from other applicants as you’ll be displaying your business acumen and this may help your approval chances. When selling assets to a third party, the official document gives buyers more confidence than a screenshot from the state’s online portal, potentially helping you negotiate a better deal.
Pro-tip: Run certified searches for your complete business name and common errors because typos happen and a search for “Jim’s Hardware” might miss liens that were filed against “Jims Hardwear.”
If the search turns up errors or liens that shouldn’t exist, here’s the process to have them removed.
Removing UCC Liens
Removing a UCC-lien from your asset is easy. Just follow this 5-step process:
- Send an authenticated demand letter to the lender or other lienholder.
- Prepare a UCC-3 financing amendment.
- File with your Secretary of State or the county for real estate.
- Get a stamped acknowledgement from the filing office.
- Re-run a certified UCC search to verify the public record is now clean.
Step 1: Send Authenticated Demand Letter
Send a letter to the lienholder demanding a §9-513(c) termination of the UCC lien. Sending it electronically is fine in most cases, but it’s safer to send both electronically and physically with signature required, because lenders have 20 days “after receipt” to process the UCC-3 termination. You don’t want to lose time if they say they never got it.
Pro-tip: Ask the lender to put your email in the “Send Acknowledgement To” box when they submit the UCC-3 filing and you’ll get an email from your Secretary of State the moment they terminate the UCC lien.
If the lienholder cooperates, then skip ahead to step 5. Otherwise, you can remove the lien yourself.
Step 2: Fill Out UCC-3 Filing
Download and fill out the “UCC3 Financing Amendment” from the IACA website and make sure you check box 2 for “termination.”
Step 3: File With Your Secretary of State
If 20 days have passed since the lender received your demand letter and they haven’t removed the lien, file your UCC-3 form with your Secretary of State if it is an asset, or with the county where you have real estate if it is a property.
Step 4: Get Stamped Acknowledgement
After you file, get a stamped acknowledgement from the state or county clerk. E-file systems should give you a downloadable PDF immediately. If you don’t see an option for the stamped acknowledgement, contact the office directly or go in person to get a hard copy. Save this file for future reference in case you need it for later audits.
Step 5: Re-Run a Certified Search
The final step to remove UCC liens and clear your assets is to check your state or county’s website daily. If you don’t see the lien terminated within 72 hours, follow up directly with the recording office.
Once you confirm the public record is clean, ask your Secretary of State or county recorder to re-run a certified UCC search to get proof for future lenders or buyers that your asset is clear of all UCC liens.
By staying in proactive communication with lenders as your payoff date approaches, and following the 5-step process to remove UCC liens, you’ll keep your assets free and be able to clear them to sell or use as collateral for future financing.
National Funding does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal and accounting advisors.
