Auditor's Corner (Oct 2023)

UCC Forms/Financing Statements in Virginia

The Virginia State Corporation Commission (SCC) has slightly modified the Uniform Commercial Code (UCC) forms that it will accept starting October 1, 2023. The newly modified UCC forms on the SCC website can be found here.

Why does this matter? UCC forms will be rejected if the new form is not used. In commercial lending transactions, this may delay issuing policies or cause irritation on behalf of lenders. As a general rule, we as settlement agents only record the forms provided by the lender.  As settlement professionals we need to be aware of changes so we can inform our lender customers. It’s good customer service.

What is a UCC / Financing Statement? Real estate can be pledged as collateral to secure a loan by recording a deed of trust. Standard deed of trust forms include all the fixtures attached to the land, which means the buildings, built in appliances, and related matters. In commercial transactions lenders want a lien on more than just the real estate. They want a lien on the inventory in a retail or wholesale operation, the trade fixtures (counters, decorative wall coverings, tables & chairs, etc.), and on all tangible personal property that is used in connection with the business. To do this a UCC statement or form must be recorded at the State Corporation Commission. The UCC statement is also know as a financing statement. The words are synonymous. The UCC statement is good for 5 years and may be renewed for additional 5 year periods if renewed prior to expiration. It’s another way for lenders to look to something tangible rather than just relying on someone’s promise to repay a loan.