How financiers can navigate UCC searches with AI

Equipment financiers navigating the complex and costly process of Universal Commercial Code searching and management can now turn to AI to simplify the process. 

Proper navigation and understanding of UCC filings is critical to ensuring certainty of payment, Eddie Gross, shareholder on Washington-based business law firm Vedder Price’s global transportation finance team, told EFN. 

 “If you’re originating deal or buying a deal, you want to know you’re going to get paid no matter what, and so you can have in your contract all the good, fancy legal words about how you’ve got to pay no matter what,” he said. “The thing that will win the day for you every time and not get you delayed in litigation, the cost expense and time expense of litigation, is to have a statute, a law right that supports your right to get this money.” 

AI navigation 

AI use continues to grow in the equipment finance industry, and one area where it can be beneficial is the navigation of UCC filings, RJ Grimshaw, founder and Chief Executive of The AI CEO and former president and CEO at UniFi Equipment Finance, told Equipment Finance News. 

“There’s a huge opportunity to turn what’s traditionally been a slow, manual process into something scalable and insight-rich with the right tools and strategic approach,” he said. 

The UCC was first published in 1952 as a set of state laws that govern commercial transactions in all 50 states and the District of Columbia, although there are some variations.  

Several of the UCC lien-search providers cater specifically to the equipment finance industry by offering tailored solutions for tracking collateral, securing interests, and managing filings. The top companies serving equipment finance include Wolters Kluwer Lien Solutions, CSC Global, National Creditors Services, Capitol Lien, LexisNexis Risk Solutions, and Parasec. 

Wolters Kluwer’s new Borrower Analytics AI solution helps lenders navigate the complex world of UCC filings, Suzie Neff, consultant for collateral-based lending and an industry relations lead for Wolters Kluwer Lien Solutions, told Equipment Finance News. 

“To search under the Uniform Commercial Code, No. 1: You have to know the Uniform Commercial Code, and it’s not something they teach you in high school,” she said. “What you have to do is you have to learn this from lenders somewhere along the way, and you have to know the rules — that the UCC filings need to be filed under the correct name, in the correct jurisdiction, and this is where things should be appropriately filed to be something called ‘perfected.’” 

Perfected transactions 

A perfected transaction puts a lender in first position on its liens, which is especially important during bankruptcy proceedings, Neff said. 

When lenders go to court and have to prove their position, “they have to bring all their supporting data to the bankruptcy judge,” she said. “Borrower Analytics helps improve their certainty and gives them the backup.”  

While having a perfected transaction for a UCC filing simplifies the process, there are exceptions, Devlin Fisher, global sales support manager at CT Corp., said during a March 18 webinar sponsored by Wolters Kluwer. 

“The UCC generally requires a secured party to perfect by filing in the filing office of the jurisdiction the debtor, but both the UCC and foreign jurisdictional systems do have exceptions and special rules for certain classes of collateral,” he said.  

Common examples of exceptions, Fisher said, are:  

• Fixtures:  

• Timber:  

• Extracted materials; 

• Currencies and cryptocurrencies;  

• Vehicles;  

• Investment property; and  

• Accounts, IP and similar types of collateral. 

Current UCC landscape

While there are several types of UCC filings, the most common, UCC-1, is valid for five years, after which it lapses, leaving the lender as an unsecured creditor if the debtor faces financial trouble or bankruptcy, according to the Uniform Law Commission, which is a non-profit association comprised of state uniform law comissions. To maintain a secure interest, lenders must file a continuation statement within six months before the initial filing expires. 

Each state can adopt or revise its own version of the UCC, further complicating the matter for lenders and compliance teams, Fisher said. 

“Even if you’re skilled, you might be an expert in Delaware UCC, it doesn’t necessarily mean you’re an expert in Hawaii, Alaska or Montana UCC,” he said. “There are nuances between the states, but overall, what the UCC does, it harmonizes business across state lines.” 

The first of nine amendments to the UCC was adopted in 2005. Before that, the UCC landscape was like the Wild West, Wolters Kluwer’s Neff said.  

But using AI to navigate complex UCC filings to find necessary information can shorten a 10-hour process to an hour or less, she said. “We make it simple while minimizing the risk.” 

Early-bird pricing for the third annual Equipment Finance Connect ends March 28. Taking place at the JW Marriott Nashville on May 14-15, 2025, this is the only event for both equipment dealers and finance providers. Learn more and register here.