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What does UCC mean?
UCC stands for Uniform Commercial Code. It is a comprehensive set of statutes created to provide uniformity in business laws and consumer credit transactions among the states. It is called a uniform law because the same law exists in many states.
What is a UCC-1?
A UCC-1 is a “financing statement” filed to show that a lender/business has a security interest in a person’s property. The person is known as the borrower or debtor.
It is not an agreement. It is just notice to the world that one person claims an interest in someone else's property, usually as collateral for a debt.
What services does the UCC Section provide?
The UCC Section provides public notice that a security agreement (the document that grants the security interest) exists in relationship to a specific debtor-lender/business (called a secured party) relationship and the collateral involved. The Secretary of State’s office is the central filing office for certain financing statements and other lien documents provided for in the Uniform Commercial Code. Filing a financing statement with our office allows a lender/business to perfect a security interest in the collateral and establish a priority in case of debtor default or bankruptcy. Documents filed include initial financing statements, amendments, assignments, and other UCC filings authorized by Tennessee statutes.
How much is the filing fee?
The filing fee is fifteen dollars ($15.00) per debtor. When there are multiple debtors on a single transaction, a fifteen dollar ($15.00) fee is required for each debtor. If multiple statements are filed, be sure to include the fifteen dollars ($15.00) fee for each debtor.
What is the Recording Tax?
A recording tax of eleven and one half (11.5¢) cents for each one hundred ($100) dollars of indebtedness or fraction thereof is due on any financing statement or amendment to a financing statement. You must state “an amount of indebtedness for Tennessee recording tax purposes.” The first two thousand dollars ($2,000) of total indebtedness is exempt from the recording tax; however, the exemption can only be taken once in relation to a financing statement and any subsequent financing statement amendments. If the indebtedness tax has already been paid to the Tennessee Secretary of State on a prior related filing, be sure to attach a sworn affidavit to that effect or a copy of the previous UCC-1 filing showing payment of the tax. This tax is often referred to as the indebtedness tax.
How are recording taxes calculated?
The recording tax is computed by excluding the first $2,000.00 of indebtedness on the financing statement and multiplying the remaining indebtedness by .00115 (11.5 cents per each 100 dollars of indebtedness).
- Example #1: A UCC1 states that the maximum amount of indebtedness for Tennessee recording tax purposes is $1,500.00.
Since the first $2,000.00 of indebtedness on a financing statement is
exempt, no recording tax is due.
- Example #2: A UCC1 states that the maximum amount of indebtedness for Tennessee recording tax purposes is $25,000.00.
The amount of recording tax due is ($25,000.00 - $2,000.00) x
.00115, or $23,000.00 x .00115, which equals $26.45.
- Example #3: A UCC3 amendment to the UCC1 financing statement in example #2 increases the indebtedness amount from
$25,000.00 to $30,000.00 and the amendment states that the
maximum amount of indebtedness for Tennessee recording tax
purposes is $5,000.00. Since the $2,000.00 exemption has already
been utilized regarding this financing statement, the amount of
recording tax due is $5,000.00 x .00115 which equals $5.75.
Is there anything that I am required to state in the financing statement?
Every financing statement must state the amount of the indebtedness tax. Use the required language “Maximum Principal Indebtedness for Tennessee Recording Tax Purposes is $_______________________”.
If I have paid the recording tax in my county, do I have to pay it again when I file my financing statement?
If the recording tax on the stated indebtedness has been paid at the county level, the following are required:
- The indebtedness language (“Maximum Principal Indebtedness for Tennessee Recording Tax Purposes is $_______________________”)
- A statement to declare that the recording tax on the stated indebtedness has been paid at the county level, and
- Attach a tax receipt to the document.
Make sure any receipt that you provide is readable. If you request an exemption from the indebtedness tax, you MUST request it in writing with an explanation for the request.
When does a UCC financing statement lapse?
A UCC financing statement is effective for a period of five (5) years. A financing statement lapses or terminates at the end of the five year period. A continuation statement can be filed to extend the lapse date if it is filed within six (6) months before the security interest expires.
What are the most common reasons for rejection of a UCC filing?
- The amendment is not filed on the proper form. The appropriate forms are: National Financing Statement Amendment (Form UCC3) (rev 7/29/98) or (rev 5/22/02) and, if applicable, the National Financing Statement Amendment Addendum (Form UCC3Ad) (rev 7/29/98) or (rev 5/22/02) and the National Financing Statement Addition Party (Form UCC3AP) (rev 5/22/02).
- The correct total amount due for the filing fee and recording tax (if applicable) was not submitted. Note: When an inadequate payment amount for multiple transactions is submitted with a UCC3, all transactions are rejected.
- The file number is not legible or can not be matched to an un-lapsed initial financing statement in the UCC information management system.
- The document does not identify ANY type of transaction in item #2, #3, #4, #5 or #8.
- For a continuation, the record is not filed within the six month window prior to lapse.
- In the event of an assignment, the filing fails to legibly provide the name and mailing address of the assignee.
- When an amendment adds a new party and the record does not legibly provide the new party’s name and/or mailing address.
- When an amendment adds a new debtor and the record does not legibly identify the debtor’s last name.
- When an amendment increases indebtedness and does not include the required indebtedness language.
- An unsigned check is sent for payment.
- The original file number (UCC1) was not provided when you submitted a UCC3.
Please be sure that any filing not submitted on a Secretary of State form (especially search requests) includes all of the required information. Our forms contain all of the required information.
How can I find out the status of a UCC filing?
Contact us by:
How long is UCC filing valid?
A UCC financing statement is valid for five (5) years plus any continuation.
How do I get the forms to use?
UCC forms are available online.
A financing statement amendment must be filed on the National Financing Statement Amendment (Form UCC3) (rev 7/29/98) or (rev 5/22/02), and, if applicable, the National Financing Statement Amendment Addendum (Form UCC3Ad) (rev 7/29/98) or (rev 5/22/02) and National Financing Statement Amendment Additional Party (Form 3AP) (rev 5/22/02).
How do you file a UCC1?
Filing a UCC can be complicated. Detailed instructions are provided in our filing guide: http://www.tn.gov/sos/forms/fg-ucc2004.pdf
Can I FAX or E-MAIL my filing?
It is our objective to be able to offer electronic UCC filings as soon as practical, but it is not available at this time.
Can I use my credit card?
Currently, credit card payments are not available.
Can I see the UCC financing statement online?
Search requests may be submitted in person or by mail, but at this time no images of filed UCC statements are available online.
How do I get a copy of a filing?
Request a search. We conduct three types of searches which will result in copies. Please consult our filing guide for detailed information on each type of search. The fee for a copy search is $15.00 for each filing plus $1.00 per page.
What does the indebtedness language mean?
“Maximum principal indebtedness for Tennessee recording tax purposes is $____________________________.”
Tennessee law imposes a recording tax on any instrument evidencing indebtedness, including, but not limited to, mortgages, deeds of trust, conditional sales contracts, and financing statements.
The “indebtedness” is the principal debt or obligation but does not include any amount of interest or collection expenses including, attorney's fees and expenses unless that amount is added to the principal debt or obligation.
Why is my name on the UCC form?
We index information in the UCC system based upon the name of the debtor.
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