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Frequently Asked Questions

• What does BBCON specialize in?
• Does BBCON offer any reference material?
• Does BBCON offer training in an In House setting specific to my financial institution?
• What is Training OnDemand and how does it work?
• I heard you have something called a "3L" program. What is it?
• I have a customer that has a brokerage account with Merrill Lynch. He would like to use some of the securities in the account as collateral. How may I describe the collateral and how is it perfected?
• In your seminar, you stated that a purchase money security interest might not be the way to go. Why?
• One of our financing statements expired, and we still have loans secured by the collateral listed in the expired UCC1. If I refile, will I lose my priority position?
• We have a customer who moves his cattle from Colorado to New Mexico for the winter and returns them to Colorado in the late spring. Our financing statement was recorded in Colorado. Will we lose our perfection when the cattle are moved to New Mexico?
• If the description of collateral used in the security agreement is not the same as that used in the financing statement, are we perfected in our collateral?
• I was told that if the debtor pays off the loan and later reborrows from the same lender, using the same collateral, a new financing statement needs to be filed. Is this true?
• Why can't we list the assignee of a secured party on the National UCC1 Financing Statement form?

Question: What does BBCON specialize in?

Answer: BBCON is a leader in high quality national- and state-specific consulting and training for financial institutions, lawyers, and CPAs. BBCON serves all 50 states in high-quality programs that explain the whys, not just theory, and help you institute the system you need.

Question: Does BBCON offer any reference material?

Answer: BBCON offers printed state-specific reference manuals that are written in terms easy for banks and financial institutions to understand. The manuals are written by bankers for bankers. BBCON also offers an electronic version of the manuals called 3L Software.

Question: Does BBCON offer training in an In House setting specific to my financial institution?

Answer: BBCON can design a training seminar tailored to your needs. For insitutions wanting to train over twelve people at once, this is the best option for getting your employees on the same page.

Question: What is Training OnDemand and how does it work?

Answer: Training OnDemand provides training seminars in a streaming video format. You can view the seminars from your own workspace. All you need is access to a computer with broadband internet and speakers and you can watch the video at any time. You have full control over the video with the ability to pause, rewind, stop, and fast-forward. This allows you to pause if something important comes up or rewind to better understand the subject matter.

Question: I heard you have something called a "3L" program. What is it?

Answer: 3L Software is BBCON's reference manuals in electronic form. It is designed to cut the time it takes to look up various laws and regulations. 3L is designed in an easy-to-use Acrobat Reader Format, so there is no confusing software to re-learn. With 3L you can perform a search to find answers quickly and efficiently.

Question: I have a customer that has a brokerage account with Merrill Lynch. He would like to use some of the securities in the account as collateral. How may I describe the collateral and how is it perfected?

Answer: This may not be an easy question to answer. All states have adopted the Revised Article 9 (Investment Securities). The account is most likely a securities account. The stock represented in the account is known as entitlements. The description could either include all entitlements in the account by stating that a lien is given in the securities account with the account number, the owner of the account's name, and the intermediary where the account is located. A lien could also be limited to specific entitlements, i.e., 5000 shares of Wal Mart common stock. Perfection can be by the filing of a financing statement or exercising control of the securities. Control has priority over filing, but a wise lender should do both. File a financing statement and get control as soon as possible. Control of an account with an intermediary (like Merrill Lynch) can be obtained by agreement with all three parties, i.e., 1) the owner of the account, 2) the secured party, and 3) the intermediary. All three must sign the agreement. Also, most intermediaries can set up a control account for the secured party.

Question: In your seminar, you stated that a purchase money security interest might not be the way to go. Why?

Answer: A purchase money security interest (PMSI) does have some advantages over the first to file or perfect rule. But, if not handled with great care, it can give you a false sense of security. The super PMSI carries with it the following weaknesses:

1. Because of the limitation in PMSI loans, the future advance clause and dragnet clause only applies to a first-to-file, or perfect security interests.
2. The super-lien is limited only to the amount loaned to allow the debtor to acquire the property, and the borrower must use those very dollars for that very purpose. The code states that a PMSI is given only if such value advanced is used for its acquisition. [9-103]
3. A PMSI is difficult to obtain. There are specific requirements that must be met regarding the date of filing and, with inventory, the required notice to all who have an interest of record in the inventory.

Question: One of our financing statements expired, and we still have loans secured by the collateral listed in the expired UCC1. If I refile, will I lose my priority position?

Answer: You may have already lost your priority, but didn't find out until now. First, prepare a new financing statement as authorized by the debtor. Once this new financing statement has been recorded, request a search and pray. You will then find out if you lost your priority, or if you are lucky.

Question: We have a customer who moves his cattle from Colorado to New Mexico for the winter and returns them to Colorado in the late spring. Our financing statement was recorded in Colorado. Will we lose our perfection when the cattle are moved to New Mexico?

Answer: Under Revised Article 9, if the debtor's jurisdiction did not change the location of filing does not change. You file in the debtor's jurisdiction. Changing the location of collateral will not affect your perfected status if the security interest was perfected by filing a financing statement.

Only if the debtor's jurisdiction changes do you need to file in the new state.

Question: If the description of collateral used in the security agreement is not the same as that used in the financing statement, are we perfected in our collateral?

Answer: The description in the security agreement and that used in the financing statement does not need to be the same. The purpose of the description in the security agreement is to reasonably identify the collateral. The purpose for the description in the financing statement is to put the world on notice of what the collateral may be. The financing statement needs to cover the general territory. For example, if the security agreement describes the collateral as one Canon copier Serial Number 593-9033-6577, Model R26D, and the financing statement described the collateral as all equipment now owned or hereafter acquired, if the copier is not being used for personal, family or household purposes, is not being held for sale, lease, or consumed in the business, then the copier is equipment. The filing on all equipment would be adequate. Such a financing statement would be sufficient to put the world on notice that a perfected lien may exist. Financing statements tend to be more broad than secruity agreements. When in doubt, the use of the same description in both the security agreement and financing statement is wise.

Note: If you're using the Security Agreement under Revised Article 9 for the authority to file, then the description must be the same in the financing statement.

Question: I was told that if the debtor pays off the loan and later reborrows from the same lender, using the same collateral, a new financing statement needs to be filed. Is this true?

Answer: Filings and loans have nothing to do with each other. The filing is a notice that an interest may exist. A security agreement authenticated by the debtor, value given by the secured party to the obligor, and the debtor having rights in the collateral gives the secured party a lien. Only one financing statement need be recorded per debtor, which puts the world on notice that a perfected lien may exist and where to go to get additional information regarding such lien. See the note on the previous question.

Question: Why can't we list the assignee of a secured party on the National UCC1 Financing Statement form?

Answer: There are no provisions to file an assignment on the National UCC1 Financing Statement Form. It must be submitted on an addendum form.