What Is a UCC Lien?

The UCC, or Uniform Common Code, is a universal code for trade used in all 50 states, as well as the District of Columbia, Puerto Rico, Guam and the U.S. Virgin Islands. The UUC code describes preferred methods of lending, leasing, sales and banking. One provision of the UCC Code is the utilization of a UCC lien.

History

UCC liens first began with the enactment of the UCC in 1952. The section of the code that deals with liens was also revised in 1991.

Significance

A UCC lien is placed on some type of good or product by a party other than the item's owner.

Function

The primary function of a UCC lien is for protection during a business transaction; it is meant to reduce the possibility of loss while doing business.

Effects

If an item has a UCC lien placed upon it, the item cannot be sold to another party; if the item requires insurance, the lien also requires that this insurance be maintained.

Examples

If a bank granted a loan to a manufacturing company, using the building and equipment as collateral, the bank would place a mortgage upon the building, and a UCC lien against the equipment.

Identification

UCC lien information is a matter of public record and can be obtained from Secretary of State offices in any given state.

Resources

• American Law Institute UCC Code