Top
 In This Issue:  
 

Featured Article

 

Newsletter Archive

 

In The Spotlight 

 

Seminars & Events 

 

What our Clients say... 

Quick Links:   

 

 
 
 
 

PCFS Solutions

 
 
 

Contact Us 

 Spotlight

IN THE SPOTLIGHT

  

Jeffrey S. Feldman
Jeffrey S. Feldman, Esq.
Jeff concentrates his practice on the litigation, arbitration and trial of commercial disputes in the state and federal courts. Over the course of his more than 15 years of litigation experience, he has represented organizational and individual clients in lawsuits involving a broad range of substantive areas, including: contract law, the Uniform Commercial Code, the transfer and enforcement of judgments, creditors' rights matters, partnership law, disputes among shareholders in closely held companies, disputes among members of limited liability companies, injunction proceedings, covenants not to compete, breach of fiduciary duty claims, business tort claims, unfair competition claims, civil fraud claims, class actions, civil conspiracy and RICO claims, commercial disparagement and defamation claims, abuse of process claims and vicarious liability claims.   

  

ADMISSIONS:

  

  • Pennsylvania
  • New Jersey
  • United States District Court for the Eastern District of Pennsylvania
  • United States District Court for the District of New Jersey
  • United States Court of Appeals for the Third Circuit

 

To read more about Jeff, click here

  




CONNECT WITH US:

 

Starfield & Smith, PC is on LinkedIn!

 

View my profile on LinkedIn 

 

Link yourself to Starfield & Smith to receive updates, articles and news pertaining to SBA and lending related topics.  

Find us on Facebook!

 

Like us on Facebook

 

Become our fan on Facebook to receive updates, articles and news pertaining to SBA and lending related topics.  

Starfield & Smith PC is on Twitter!

 

Follow me on Twitter 

 

Follow us for links to our most recent news and articles.  

FEATURED ARTICLE 

Best Practices: Mitigating Risks of Intervening UCC Filings with Payoff Letters  

 

By: Kristen G. Dickey, Esquire  

  

Kristen G. Dickey
Kristen G. Dickey, Esquire

SBA reports that the most frequent reason for a repair of the SBA guaranty is the lender's failure to obtain the correct lien position on collateral as set forth in the SBA Loan Authorization.  While the priority of a lender's lien applies to both real and personal property, the recommendations set forth herein pertain to a borrower's business assets only.  Title insurance coverage is usually the starting place for protecting lien priority on real property.

 

SBA Loan Authorizations frequently require that security interests be taken on all of a borrower's business assets or "personal property," the perfection of which are governed by the filing requirements of the Uniform Commercial Code (UCC).  The payoff letter is an often overlooked piece of due diligence that is vital to properly document and close some SBA loans in accordance with the SOP and the requirements of the SBA Loan Authorization.  Many times, the payoff letter becomes a last minute item obtained in a rush prior to closing.  Unfortunately, an insufficient payoff letter can give rise to a repair or denial of the SBA guaranty when a lender fails to obtain a commitment from a creditor to release its lien(s) upon payoff.

 

A carefully crafted payoff letter details the specifics of the loan to be paid off and provides the total payoff amount through a specific date along with a per diem rate with which to calculate interest if the payoff arrives after the specified date.  Additionally, the payoff letter should include a request for the creditor to confirm that it will release its lien on and security interest in borrower's assets and file a termination of any and all associated UCC filings within a designated time frame upon creditor's receipt of the payoff.  The creditor should specifically identify the UCC filing(s) by filing number.  By comparing the creditor's list of UCC filings to be terminated upon payoff with the results obtained from a proper UCC search, a lender can identify any intervening liens that may require resolution prior to closing.

 

Sometimes a UCC filing may appear on a lender's UCC search that does not relate to a loan payoff, and this may indicate that a creditor that was previously paid in full failed to terminate its UCC filing.  If the debt was paid in full, borrower will need to contact the creditor and obtain a UCC-3 termination filing prior to closing.  In other situations, a creditor may refuse to terminate the UCC filing associated with a loan payoff because the same collateral secures a different loan by the same creditor.  In this instance, if the debt is currently outstanding, lender may ask borrower whether it is possible to pay off such loan before closing and obtain a UCC-3 termination filing, or borrower must contact the creditor to request a subordination agreement or intercreditor agreement. Otherwise, lender's underwriting department must confirm whether taking a position junior to the creditor will be acceptable in terms of both lender and SBA rules.

 

The UCC does not give a lender who has paid off a borrower's debt owing to an existing creditor the authority to terminate that existing creditor's UCC filing.  While debtors do possess such a right under limited circumstances, the best practice is for lenders to either: (i) require a written confirmation from each creditor of record that it has no lien against the borrower; (ii) require each creditor of record, through use of a payoff letter, to provide written authorization for the lender to file a UCC-3 termination filing upon payoff; or (iii) have each creditor of record provide a copy of its properly filed UCC-3 termination prior to closing.

 

For more information regarding mitigating risks of intervening UCC filings with payoff letters, please contact Kristen at [email protected] or at 407.618.0698.

   

Back to Top 

EVENTS & SEMINARS Events

 

Presented By:  CTAGGL
Date:  August 18 - 20, 2014
Location:  Westin Riverwalk, San Antonio, Texas
 
For more information about this event and/or to register, click here. 

Presented By:  FLAGGL
Date:  September 17 - 19, 2014
Location:  Rosen Shingle Creek Resort, Orlando, FL
 
For more information about this event and/or to register, click here.

NAGGL 2014 Annual Conference

Presented By:  NAGGL
Date:  October 28 - 30, 2014

For more information about this event and/or to register, click here.


Bob Cota / President / PCFS Solutions

 

It is a pleasure working with a law firm that can provide us with legal advice that also addresses the business aspects of the issues that we deal with. Your counsel, combined with your unique knowledge of the SBA industry, has been a great help to us.
 
We look forward to a long relationship with your firm. 

 

                                          
OUR PRACTICE AREAS

 

SBA Compliance Audits  |  SBA Guaranty Purchase Reviews & Recovery

SBA Franchise Reviews |  SBA Lender Training

Regulatory Compliance & Lender Oversight |  Loan Documentation & Closing

Commercial Litigation |  SBA Portfolio Management

SBA & Conventional Creditors' Rights 

 

Contact
Starfield & Smith, PC
  
 
Pennsylvania Office:
1300 Virginia Drive | Suite 325 | Ft. Washington, PA 19034
phone: 215.542.7070 | fax: 215.542.0723
  
Philadelphia Office:
2000 Market Street | Suite 500 | Philadelphia, PA 19103
phone: 215.542.7070 | fax: 215.542.0723
  
Florida Office:
2600 Maitland Center Parkway | Suite 330 | Maitland, FL 32751
phone: 407.667.8811 | fax: 407.667.0020
 
 
This email is an advertisement from Starfield & Smith, P.C. and is subject to this disclaimer.
 � 2009-2014 Starfield & Smith, P.C. All Rights Reserved