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In the Spotlight
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Katie concentrates her practice in the areas of commercial lending, real estate and commercial contracts. She represents financial institutions nationwide, including national banks, community banks, credit unions and non-bank lenders, who extend commercial credit facilities to small and mid size businesses. Katie has extensive experience in the areas of government guaranteed lending and acquisition financing and has closed hundreds of commercial finance transactions, from start-up business transactions to complex real estate and business acquisitions.
Katie advises lenders on eligibility matters and documenting and closing loans under the SBA 7(a) and 504 loan programs and assists lenders in preserving and protecting their government guaranty. As a closing attorney, Katie reviews loan files, drafts and negotiates loan documents, advises on due diligence documentation and coordinates the closing and funding of transactions. She also assists lenders with respect to their closed SBA-guaranteed loan files by reviewing and preparing SBA guaranty repurchase packages, responding to SBA recommendations, and performing loan portfolio audits.
ADMISSIONS:
To read more about Katie, click here.
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FEATURED ARTICLE
Best Practices: Obtaining a First Priority Security Interest in Fixtures
By: Victor A. Diaz, Esquire
Fixtures are defined by the Uniform Commercial Code (the "Code") as "goods that become so related to real property that an interest in them arises under real property law." U.C.C. §9-102(a)(41). Generally speaking, these are items not easily removable and they effectively become part of the land. Examples of fixtures may include items such as leasehold improvements, sprinkler and HVAC systems. Goods, on the other hand, are generally items of personal property that are movable when the security interest attaches. U.C.C. §9-102(a)(44). In practice, determining when a "good" becomes a "fixture" requires a complicated analysis that is largely dependent on the circumstances, state real estate law, and which is, in the end, imperfect at best.
Courts have attempted to clarify this ambiguity as to when a good becomes a fixture by promulgating a three part test: 1.) has the good been attached to the real property; 2.) does the good benefit, or is it integral to the use or operation of the real property; and 3.) whether the party affixing the good to the real estate intends for the good to become part of the real estate. Teaff v. Hewitt (1853), 1 Ohio St. 511, 530. However, this test is one that must be performed on a case by case basis, and, even when applied, does not provide a level of certainty that most secured lenders would be comfortable with. So what should secured creditors do when financing fixtures or goods that may become fixtures?
A secured party financing fixtures has two options for obtaining a valid security interest, in addition to recording a mortgage or deed of trust. The first option is to file a UCC-1 financing statement with the state office or agency duly authorized by each state for central indexing, typically the Secretary of State, identifying fixtures as part of the description of collateral. The Code requires the secured party to include in the fixture filing: (i) the name of the debtor, (ii) the name of the secured party; and (iii) a description of collateral. While this filing will perfect the secured creditor's interest in the collateral, it will only provide a priority lien for the creditor's interest in goods that have not yet become fixtures.
The second option is to file a "fixture filing." U.C.C. §9-102(40). The term "fixture filing" is a defined term under the Code, meaning a financing statement recorded in the real property records and whose content also includes: (i) an indication that it is to be recorded in the real estate records, (ii) the description of the affected property; and (iii) the name of the record owner of the real property. This additional information is necessary to properly index the filing in the real property records. The fixture filing is the only method to properly perfect an interest in goods that have become fixtures that will have priority over all other creditors.
The main difference between the two methods of perfection is the priority of the security interest in the fixtures. A security interest in fixtures that is perfected by a fixture filing will have priority over one perfected by a UCC-1 filed in just the central state office. Because determining when a good becomes a fixture can be difficult, the best practice for a Lender seeking to place a lien on fixtures, or goods that may become fixtures, is to file a UCC-1 covering, at a minimum, goods and fixtures at the state level and record a fixture filing in the real property records for the county in which the real estate is located.
For more information on best practices for lenders to perfect their security interests in fixtures, please contact Victor at 407-667-8811 or at vdiaz@starfieldsmith.com.
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EVENTS & SEMINARS
Equity Injection Issues
Presented By: SBA West Virginia District Office
Instructor: Ethan W. Smith
Date: July 21, 2015
Location: Webinar @ 10:00am EST
For more information about this event and/or to register, click here.
Great Lakes Lenders Conference
50 57 Monitoring
Instructor: Ethan W. Smith
Date: July 23, 2015
Location: Detroit, Michigan
For more information about this event and/or to register, click here.
Great Lakes Lenders Conference
LSP Best Practices
Instructor: Ethan W. Smith
Date: July 23, 2015
Location: Detroit, Michigan
For more information about this event and/or to register, click here.
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David Lucht / Chief Risk Officer / Live Oak Bank
Starfield & Smith is our go-to law firm for issues regarding SBA Repurchases or Compliance. Their knowledge of the SBA, in terms of the people, processes, and policies is unparalleled. The more complex the issue, the more this firm shows their value. We use them both on the closing side, as well as for helping us on Ten-Tab matters. Our main point of contact at the firm, Ethan Smith, in particular is just an exceptionally bright attorney. I whole-heartedly endorse them for any work that involves the SBA programs. They are simply recognized as the expert in that area of law.
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