An unauthorized UCC lien on your business is a public claim against your assets. Filed without a valid security agreement, it directly threatens your company’s financial health. You have rights and can take action to address an improper lien.
What an unauthorized lien means for your business
An illegitimate UCC lien can severely impact your business. It can freeze access to new funding, as lenders may refuse credit. The filing can also harm your business credit score and reputation. This restricts your ability to operate and grow, requiring quick action.
Immediate steps to challenge an improper filing
Challenging an incorrect or unauthorized UCC lien requires a methodical approach to build a record of your dispute.
Start by taking these actions:
- Review All Documents: Scrutinize agreements with the creditor. Confirm if you granted permission to file a lien against the listed assets.
- Gather Your Evidence: Collect paperwork showing the lien is incorrect or unauthorized, such as contracts, payment records, and correspondence.
- Send a Formal Demand: Write to the creditor, formally demanding a termination statement to remove the lien and citing reasons for its invalidity.
These actions establish your position for the next phase.
Legal options for removing an illegitimate lien
If the creditor ignores your demand, you have legal recourse under UCC Article 9. You can file an information statement in the public record to dispute the lien’s validity. State law also provides pathways to seek financial damages from the creditor for harm caused by wrongfully filed liens. Pursuing these options requires specific legal procedures.
Taking control when a lien is wrongfully filed
Challenging an improperly filed UCC lien involves a detailed process. Failing to follow correct procedures can leave the lien in place, blocking access to capital and harming business operations. Understanding legal strategies for removing a UCC lien can resolve the situation efficiently. An experienced attorney can help protect your business and hold the filer accountable.