Court dismisses cross-complaint based on defective UCC-1 filing.

In 1380 Hous. Dev. Fund v. Carlin, 138 A.D3d 613 (2016), the First Department dismissed defendant’s cross-complaint based on a defective UCC-1 fixture filing.

In order to perfect a lien against real property, the UCC-1 financing statement needs to be filed with the local property records pursuant to UCC 9-334.  Here, the defendant filed  UCC-1 with the Secretary of State in 2005.  The second fixture filing filed in 2010 fails to satisfy the criteria set forth in UCC 9-502(b).  There was no description of the collateral, specifically the fixtures it needed to cover; there was no explicit intention to cover fixtures on the property; the filing lacked the description of the property including block and lot numbers.

The defendant also failed to meet the requirement under UCC 9-108 in that the description was not sufficient to identify the collateral subject to the lien.  While there was a stipulation and pledge agreement, it only referred to the borrower’s 50% share certificates and not the real property itself.  The UCC-1 financing statement referred to the stipulation agreement, but did not reasonably identify the assets.  Thus, in the Court’s view, the defendant failed to perfect a lien established by a security agreement under UCC 9-102.

 

 

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