Guide
How to remove a UCC lien
A UCC lien comes off a business's record when a UCC-3 termination statement is filed in the state where the original UCC-1 was filed. Once the debt is paid and the lender has no further commitment to lend, send the lender a signed demand to terminate. Under the Uniform Commercial Code it then has 20 days to file the termination, and if it doesn't, the business may file it itself.
Step by step
- Find every filing. Search the state where the business was formed, by its exact legal name, and note each file number and secured party. A business can have several filings from one lender. Find any state's UCC search.
- Pay off or settle the debt, in writing. Get a payoff letter that says the obligation is satisfied and that the lender has no commitment to advance more.
- Send an authenticated demand. A signed letter or other authenticated record asking the secured party to file a UCC-3 termination for each file number. Keep proof that it was received.
- Wait up to 20 days. For a business debt, the secured party must file the termination, or send it to you, within 20 days after it receives your demand (UCC § 9-513(c)).
- Check the record. Search the state again: the termination should appear in the filing's history with its own file number and date.
If the lender won't file the termination
When the secured party misses the deadline after your demand, the business may file the termination itself. The UCC allows a debtor-authorized termination in exactly this case, as long as the termination says the debtor authorized it to be filed (UCC § 9-509(d)(2)).
A secured party that ignores a proper demand can also owe damages: any actual loss it caused, plus $500 in statutory damages (UCC § 9-625(b) and (e)(4)). A business lawyer can tell you whether that applies to your filing.
When a UCC lien ends on its own
A financing statement is effective for five years from the date it was filed (UCC § 9-515(a)). The lender can keep it alive only by filing a continuation in the six months before it lapses, which adds five more years (§ 9-515(d) and (e)). If no continuation is filed, the filing lapses without anyone doing anything.
So a lien from a loan paid off years ago may already have lapsed. Check the lapse date and the history before you chase a termination.
A filing you never agreed to
A UCC-1 may only be filed if the debtor authorized it, which signing a security agreement does automatically (UCC § 9-509(a) and (b)). If a filing names your business and you never authorized it, ask the filer to terminate it first.
The business can also file an information statement saying the filing was not authorized (UCC § 9-518). It goes into the record next to the filing, but it does not remove or end the filing. Some states have extra remedies for fraudulent filings; that's a question for a lawyer in the state where the filing sits.
What a search shows afterwards
A terminated filing doesn't vanish. The filing office keeps it in the index until at least one year after it lapses (UCC § 9-519(g)), so a lender searching your business will still see it, marked with its termination. That's normal: a terminated lien shows a debt that was paid.
Clerkfield shows each filing's status and its full history, so a terminated lien reads as terminated, with the date. How Clerkfield's lien search works.
General information about the Uniform Commercial Code as adopted across U.S. states, not legal advice. State versions can differ in details; for a specific filing, ask a lawyer in the state where it was filed.