Many New York business owners assume a UCC lien automatically ends once repayment is complete. Unfortunately, liens can remain active due to filing delays or disputes with your lender. Identifying the issue can help you resolve lingering debts and regain control of your finances.
There is an unpaid balance
Disagreement over the final settlement is the most common reason a lien remains active. A lender may claim additional balances on top of your agreed deductions. To avoid this, review your MCA agreement for any hidden fees or conditions blocking the release of your UCC lien.
Having the following documentation can also aid in verifying any transaction discrepancies:
- Payment receipts
- Bank statements reflecting payments
- Emails or letters confirming payments
- Notes or disputes with the lender about the payoff
The lender has not filed a UCC-3
To terminate a lien, the lender or business owner must file a UCC-3 termination notice. When there is a delay, the lien remains active. UCC filings are publicly available on the New York Department Of State website. Check the status of your lien and, if listed, inform your lender to complete the UCC-3 termination.
There is an error in the filing process
Incorrect details may indicate a filing error that needs amendment before your lien can be terminated properly. Verify all relevant business details of your lien records on the New York state department website. Some common filing errors are abbreviated business names, an incorrect entity type or a wrong filing date. Catching filing errors also prevents any future issues with banks or lenders when accessing your business records.
How an active UCC lien can affect your business
Banks and lenders often refer to UCC filings as part of their approval process. An active lien can suggest that your business still has outstanding obligations. In some cases, that can lead to higher interest rates or limit future financing options.
While it is possible to personally terminate a UCC lien, filing it independently carries risks. If filed incorrectly, it could create disputes with your lender or further delay the release of your lien. Getting the appropriate guidance from a legal professional can help you navigate the release of your lien and ensure that all requirements are completed accurately.