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IN THE SPOTLIGHT
 | | Ethan W. Smith, Esq. |
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Ethan is a co-founder of Starfield & Smith, P.C., where his areas of practice focus on government guaranteed lending, commercial lending, banking, real estate and commercial law. Mr. Smith has closed thousands of government guaranteed loans on behalf of his lender clients, assists lenders nationwide with SBA guaranty purchase issues and has been retained as an expert witness on SBA related litigation matters. Mr. Smith is a licensed title insurance agent for Chicago Title and Fidelity National Title in both Pennsylvania and New Jersey. He is a member of the National Association of Government Guaranteed Lenders (NAGGL) and is a frequent speaker and serves as a member of its Associate Member Committee. Mr. Smith is also an affiliate member of the National Association of Development Companies (NADCO) and is qualified as a designated closing attorney under the SBA 504 Program. During the years 2005-2011, Mr. Smith was honored by being named a Pennsylvania "Rising Star" by Philadelphia Magazine and is rated by Martindale Hubbell as an "AV Preeminent" attorney. He earned his B.A. degree from Johns Hopkins University, Baltimore, Maryland and J.D. degree from the College of William and Mary School of Law.
To read more about Ethan, click here.
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FEATURED ARTICLE
Best Practices: Securing Unique Collateral
By: Jennifer Borra, Esquire
 | | Jennifer Borra, Esquire |
One of the key steps in properly closing an SBA loan is to perfect your security interest in the pledged collateral and attain the required lien priority. For certain collateral, such as real estate and tangible personal property, lenders can easily confirm the proper lien documentation and appropriate filing offices. However, lenders face challenges when borrowers are pledging "unique" collateral. There are undoubtedly numerous examples of "unique" collateral, but this article will briefly examine issues securing liens on patents and vessels.
Patents are a type of intellectual property, issued by the United States Patent and Trademark Office ("USPTO"). Many lenders submit filings related to securing a lien on a patent, or a patent application, through the USPTO. The USPTO's Assignment Division records security agreements related to a patent or patent application for a fee, and states that such documentation provides the public with notice of the additional matters that may affect the ownership of a patent or patent application. However, lenders must proceed carefully, as case law indicates that the federal statutes governing security interests in patents have not preempted the Uniform Commercial Code, and thus a state filing would also be required to properly perfect the security interest. Therefore, lenders should still file a UCC-1 covering the patent and/or patent application with the Secretary of State where the borrower is located.
In certain cases, a borrower may pledge a vessel as collateral. Liens on vessels are processed through the United States Coast Guard, National Vessel Documentation Center (NVDC). Federal Regulations govern filings with the NVDC, and a specific type of lien document referred to as a "Preferred Ship's Mortgage" is often utilized as the lien instrument. There are a variety of documentation companies specializing in vessel liens. Some of these companies may also assist with obtaining an abstract of title from the Coast Guard and a certificate of ownership to confirm the appropriate mortgagor identity and any prior liens. It may benefit the lender to prepare and submit a notice filing with the Secretary of State where the borrower is located to alert subsequent creditors of the lien on the vessel, although it appears such a filing would not be effective to perfect a security interest in the vessel.
Ultimately, lenders must take care in preparing and submitting their lien instruments on unique collateral. There are differing views on the proper method to secure liens on patents and vessels, and such determinations are dictated by the particular collateral pledged. Lenders would benefit from consultation with closing counsel and other appropriate third parties who specialize in performing searches on such assets, drafting and filing the necessary lien instruments, and issuing opinions regarding the validity of such filings.
For more information about perfecting security interests in these and other types of collateral, please contact Jen at jborra@starfieldsmith.com or at 215.542.7070.
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EVENTS & SEMINARS
*** THIS WEEK ***
"Explore the New SOP 50 10 5(F)"
For more information about this event and/or to register, click here.
Closing & Funding the SBA Loan
Date: September 16, 2013 & September 17, 2013 Location: Laurel, MD
For more information about this event and/or to register, click here.
"Advanced SBA Loan Documentation & Closing"
Instructor: David W. Starfield
Date: November 4, 2013 & November 5, 2013
For more information about this event and/or to register, click here.
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WHAT OUR CLIENTS SAY...
Fredda K. Morgan / SBA Administrator / Green Bank
I have known and worked with David Starfield and Ethan Smith since the mid 90's. The SBA market has seen many changes over the years and in every aspect of my association with them, from processing to liquidation, they and their firm have proven to be experienced, knowledgeable and professional. I wouldn't be where I am today without them showing me the way. I refer anyone to them that is in need of their services.
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