Legal Question in Business Law in New York

Re: A Secured Party Question

You should consult a lawyer to obtain legal advice regarding this. The law regarding security interests is extremely complex.

You have not indicated what type of property the collateral is which is critical to properly answering your question.

However, in general, if there is already a UCC financing statement that is filed, that is a very good indication that someone else has an interest in the collateral. It is also quite likely that their interest will come before yours. That does not prevent you from filing a financing statement, but without making sure that the first financing statement does not represent an outstanding security interest, your claim for the property is likely to be secondary to the one already registered.

You may call me for a legal consultation at (212) 695-6400.

Best of luck,

Asi

Re: A Secured Party Question

UCC Financing Statements are like mortgages, but only cover personal property, not real estate. Your sketchy facts raise several questions which need to be answered to properly respond. I am presuming that only personal property is involved (like machinery or equipment)? I am also presuming that the debtor will sign the document, as both parties must sign it to be recorded, since the signature of the debtor represents the debtor's consent to filing? Is the property freely removable from its current location or permanently or quasi-permanantly affixed to its location (thus, considered a fixture)? This answer is critical to 2 issues: (1) Usually, the recording place for fixtures differs from that of freely moveable collateral and (2) is the current filing, perhaps, defective. If recorded in the wrong office, the current document may be defective. This goes to the issue of whether your filing will represent a first or second lien. If properly filed, the current document will have precedence over yours, unless its status is corrected or the current holder agrees to subordinate to yours. If you merely file yours and the current one is valid, you are in a secondary position (like a second mortgage), and any attempt to collect the collateral will require that you first satisfy the existing lien balance. More information is needed to give you a better answer than that provided above.