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Ask the lender to terminate the lien upon payoff. A good rule of thumb is to request that your lender file a UCC-3 form with your secretary of state as soon as possible after you pay off your loan. The UCC-3 will terminate the lien on your company's assets (or assets) and remove the UCC-1 filing.
After a loan has been paid off, a borrower has the responsibility of asking the lender to remove the UCC filing on the loan.
Lapsed UCC filing: The filing has passed its effective period and no continuation has been filed. Purged UCC filing: The filing has been removed from the index and is no longer searchable in most state systems.
UCC - Frequently Asked Questions - UCC-1 and UCC-3. Most filings last for five (5) years from the date of filing. Filings for a debtor that is a transmitting utility have no expiration date. Manufactured Home filings last 30 years from the date of filing ? appropriate box must be marked.
Upon lapse, a Financing Statement ceases to be effective and any security interest or agricultural lien that was perfected by the Financing Statement becomes unperfected, unless the security interest is perfected otherwise.
For UCC and EFS, a termination creates a public record that a loan was repaid, a lien was removed, or some other obligation was met.
In general, a UCC filing is not bad for your business ? it simply serves as an official notice to other creditors that your lender has a security interest in one or all of your assets. However, UCC filings can impact your business credit, risk your company's assets and/or hinder your ability to get future financing.
From our example, the UCC-1 filing can remain in place even when the debt is paid off. In these situations, you can file a UCC-3 termination yourself with your secretary of state. You must swear under oath that you've satisfied the debt in full and complete the UCC termination form.