UCC Overview

The Uniform Commercial Code governs commercial transactions. The code includes eleven articles covering a variety of areas such as sales, negotiable instruments, bank deposits and collections, and investment securities.

Article 9 of the Uniform Commercial Code (UCC), titled Secured Transactions, designates the office of the Secretary of State as the place for the filing and searching of secured transaction documents.

Financing statements are filed as a public notice of a security interest in collateral. Record searches are requested to reveal financing statements filed against an organization or individual. For example, when a debtor (borrower) pledges collateral to obtain a loan, a UCC financing statement tells a secured party (creditor) whether others have financing statements against the same collateral. Filing a UCC financing statement is a protective measure because it provides a public notice to other parties. Debtors also benefit because the notice system helps them obtain business funding.  Legally, it puts the creditor in the position of a secured creditor; and a perfected UCC financing statement may be acted on in case of default. In the event of a bankruptcy proceeding, the creditor will be in a better position to enforce its legal rights.