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 What is UCC?

Basic Information for New Users

Many consumers and small businesses may not know that when a borrower gets a loan using as collateral consumer goods or commercial or farm property in West Virginia (excluding real estate), the lender files a commercial lien to protect its financial interest.

For example, a bank gives a contractor a loan to buy a backhoe. The bank files a UCC financing statement (a lien) with the Secretary of State which lists the contractor as the debtor and the backhoe as collateral. Before the contractor can sell the backhoe, the UCC filing will show the prospective purchaser that the original bank has the first right to recover its loan from the sale. Or, before the contractor could borrow more money using that same equipment as security, the filing will show the new lender that at least part of the value of the backhoe belongs to another lender. When a debtor pays off the loan, the lender files a release and the property is free and clear.

Lenders protect financial interests through UCC filings on, for example, consumer goods, commercial equipment, farm equipment and products, fixtures, public-finance transactions, manufactured homes, timber to be cut and as-extracted minerals.

What secured transactions are not covered by UCC filings?

Real estate mortgages and other liens against real estate are not covered by the standard UCC filings. These real estate transactions relating to land, in-ground mineral rights, houses and commercial buildings are filed as real estate transactions with the Clerk of the County Commission in the county where the property is located. Some "real-estate related" transactions may be subject to UCC filings, such as minerals as they are extracted, timber to be cut, and fixtures which may become part of the real estate after installation.

Highway vehicles, all terrain vehicles and motorboats required to have a certificate of title under W.Va. Code ยง17A-3-2 are not subject to UCC filings. Liens against these vehicles are filed as part of the title with the Division of Motor Vehicles.