The Uniform Commercial Code (UCC)
What does it mean to your business? Click on "UCC Summary" and "UCC Resources by State" to get additional information.
Trading equipment covered by a blanket lien is simpler and more secure now that the North American Equipment Dealers Association (NAEDA) has produced a security interest disclaimer.
Click here for a "Statement from Legal Counsel"
The universal "Disclaimer of Security Interest" form developed by NAEDA's UCC Task Force may be used to release a specified piece of equipment from a binding blanket lien so it can be legally traded or sold. Blanket liens are common in agricultural lending and routinely used by lenders to protect security interests in property put up as collateral for operating loans.
Problems occur when a piece of equipment covered under a blanket lien is sold or traded without the lender releasing it from the lien. Since the lender has a security interest in equipment under a blanket lien, dealers can potentially find themselves in the disastrous position of owing a lender a piece of equipment or the cash equivalent should the lender seek a customer's assets.
"Things get complicated in a hurry when a UCC search is not performed," says Paul Kindinger, NAEDA president and CEO. "The task force did a great job identifying issues, providing necessary guidance to our legal team, and developing the form."
Click here for a copy of the "Disclaimer of Security Interest" form
NAEDA Chairman Bob Frazee, of the Northeast Equipment Dealers Association, chaired the UCC Task Force. Dealers on the task force included: Jeff Bieber, Far West Equipment Dealers Assn.; Ray Koenig, Ohio-Michigan Equipment Dealers Assn.; Curt Kleoppel, SouthWestern Assn.; Dave Meyer, North Dakota Implement Dealers Assn.; and Hugh Stafford, Iowa-Nebraska Equipment Dealers Assn. The lenders were represented by Ken Brouwer, John Deere Credit; Mark Eckles and Roger Fleury of NAEDA Financial, Ltd.; and Chad Corsi and Frank Ford of Textron Corporation. The legal team was led by Jack Selzer, Carol Cleaver and John Walter, of Seigfreid, Bingham, Levy, Selzer and Gee in Kansas City, Mo. Kim Rominger, executive vice president Mid-America Equipment Retailers Association, also served on the task force.
