Fixture Filings: Perfection, Priority, and Best Practices

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Caitlin: Hello, everyone, and welcome to today's webinar, "Fundamentals of UCC Fixture Filings: Perfection, Priority, and Best Practices." My name is Caitlin Alaburda, and I will be your moderator.

Joining us today is Paul Hodnefield. Paul is associate general counsel for CSC, where he is responsible for advising the company regarding real estate recording, notary, Uniform Commercial Code, and other public record transaction services.

And with that, let's welcome Paul,

Paul: Thank you, Caitlin. As you said, my name is Paul Hodnefield, and in my role at CSC I am the subject matter resource for the filing and search services that we provide related to the Uniform Commercial Code or UCC. And in that capacity it's my responsibility to monitor case law, which I do at least weekly. I monitor legislation related to the UCC on a daily basis this time of year. I do a lot of troubleshooting with filing offices. I spend time on the phone with them. In fact, I do training for filing offices, both at the county and state level, on their responsibilities under Article 9. In addition to my duties at CSC, I also coach our task force for the American Bar Association on filing office operations and search logic, and I'm a panelist every year and a contributor to the IACA or International Association of Commercial Administrators Secured Transactions Section, which is the filing offices organization.

Needless to say, with all these different responsibilities, I get a lot of information coming into me, and I do enjoy sharing it. And that's what I'm doing today. And one of the areas that triggers an awful lot of questions that come my way, it has to do with fixture filings in the UCC that's filed into the real estate records. And there's a number of reasons for it. It is confusing for many lenders and legal professionals, and as a result I put together this program, which is designed to give a high-level overview and identify some of the do's and don'ts associated with fixture filings, identify some traps along the way, and maybe help clarify what all is involved with these.

And specifically what I'm going to do today, so I'll begin with an introduction covering some essential concepts about fixture filings. Then I'll move on and talk about what constitutes a fixture because that's not always clear. In fact, most of the time it's not clear. I'll talk about the different perfection methods that are available and the basics of making a fixture filing, you know, when, where, how, and what goes into it. As we get towards the end of the program, I'll move on and talk about amendments related to fixture filings and a little bit about conducting fixture filing searches at the county level.

I am going to leave room to address your questions at the end of the program. How much room we'll see depending on how it goes. But also if we can't get to your questions today, we do capture them and I will respond offline. But if you do have questions, just go ahead and enter them into the Q&A widget on your screen.

So with that, I'm going to go ahead and get started talking about fixtures and why are fixtures so confusing. Well, part of it is because there's an overlap between the UCC, which governs security interests in personal property, and real estate law, which governs interests in real property. And there's that overlap, and that's what we're looking at today is the goods that fall into that overlapped area.

So there are some essential concepts to understand about the UCC and fixture filings in general. One of them has to do with the law that governs fixtures. Ordinarily the law governing fixtures some people might think it's real estate. Some think it's UCC. Well, there's actually overlap. Article 9 generally governs security interests in fixtures, and real property law covers everything else related to the buildings and land.

Now because there's that overlap and the rules have to apply in both the real estate and the personal property context, there are multiple methods of perfection available that have different impacts on the security interest. A secured party with a security interest in fixtures can perfect, like any other security interest, by filing a regular financing statement where the debtor is located, or they have the option of filing a fixture filing, which is a defined term in Article 9 and requires filing in the real estate records. Or they don't even have to make a UCC filing. It could be a record of mortgage that's effective as a financing statement filed as a fixture filing for UCC purposes. And it's because of these multiple methods of perfection that there can be some confusion as to how to proceed in a given situation.

Another essential thing to understand is that because these things are filed in the real estate records, it is something that filing offices do struggle with because they're typically at least with the fixture filings it's county recording offices and the real estate or the land records offices were not designed for the UCC notice filing system. They're designed to track a chain of title in real estate transactions, not a notice filing system, which is what Article 9 has for filing records at the state level. Also the filing office duties required of these offices under Article 9 are different from those applicable to real estate records. And the problem there is that the county recorders will oftentimes impute real estate concepts to UCC fixture filings where they don't apply, and that can complicate the filing and search process.

And then unfortunately county level offices do not get a lot of training on Article 9 duties. Each recording office is generally headed by an elected official, and they are kind of the head of that office and they might get advice from the county attorney, but the county attorney is rarely experienced in commercial transactions such as the UCC. So it can be a challenge at these offices because they don't get the training and they see a relatively small number of UCC records compared to the land records that they deal with, and that makes it difficult at the county level as well.

Well, let's go on and talk about what constitutes a fixture. Because we're talking about security interests in fixtures, obviously we need to figure out what a fixture is.

So what is a fixture? Well, there's a definition in Article 9, and fixtures are goods that either have been or will become so integrated into particular real estate that an interest arises under real estate law. Well, that's all well and good. The issue though is really when do the goods become subject to an interest under real estate law. Well, that is the big gray area.

We do know from a number, a multitude of cases out there addressing security interests in fixtures that the determination of whether goods are fixtures arises in a number of different contexts, not just UCC, but also real property law, tax law. It can be law related to ownership of particular goods and similar situations. So it can arise in a number of different contexts.

Now the courts, when they address these issues as to whether goods are fixtures, they recognize that it's a mixed question of law and fact. It is context specific, and it's very fact driven. And what that amounts to is it's very difficult to predict in advance what is going to be found to be a fixture. In fact, the courts have developed a three-part test that is in pretty much universal. It varies a little from jurisdiction to jurisdiction, but it is pretty much similar from state to state.

And the three parts of the test are: First of all, have the goods actually been attached to the real property? If so, that weighs in favor of it being a fixture. Do the goods further the use for which they were attached to the property? Well, again, this is something that the courts weigh to determine whether it could be a fixture or not. And then, finally, the third part of this test is whether the goods have or what was the intention of the parties in making the goods attached to the real estate. Was the intention to make them permanent parts of the real estate?

Of these three parts of the test, the intent of the parties is the most important portion. The courts weigh this very heavily. And if the parties intended for it to be a permanent part, the courts are generally going to give that great deference. If there's no evidence, then it tends to be very context and fact specific at that point.

But the most important thing to remember about all this is that the courts are going to determine whether goods are fixtures on a case-by-case basis, and that's always going to be after it's too late to do anything about it. That's why it's important to perfect the security interest properly upfront so it doesn't matter which way the courts find. In fact, if there's any question, and there usually is some sort of question as to whether goods could be fixtures or not, it's always a good idea to perfect both as if they're fixtures and as if they are not fixtures.

I mentioned that there are different perfection methods available due to the overlap between UCC and real estate law, and I want to run through those. There are the three different methods involve, central filing of a UCC financing statement, filing a UCC financing statement as a fixture filing, and then the third option is recording a mortgage that is effective as a financing statement effective as a fixture filing. So I want to run through these three different perfection methods.

As I mentioned, one is just a regular UCC financing statement, and like any other financing statement that covers inventory, accounts, equipment, and so forth it's the law of the debtor's jurisdiction or the law of the debtor's location that governs perfection and priority. And so it's filed in the location of the debtor. It's filed in the central filing office of the state where the debtor is located. And all it has to do is indicate that it covers fixtures, and it can co-mingle fixtures. And it can be accounts, inventory, fixtures, and so forth. That's very common. In fact, the super generic description of "all assets" will include fixtures.

The other option for filing a UCC record is . . . Oh, before I get to that though, one thing about the financing statement, there are no special requirements for the centrally-filed financing statement that covers fixtures. It has to comply with all the requirements of 9-502(a), which means name of the debtor, name of the secured party, and an indication of the collateral. It doesn't need to describe the affected real property or provide a legal description, anything like that. All it has to do is cover fixtures.

And once it's filed, this centrally-filed UCC record will have the priority based on the general Article 9 rules. In other words, it'll be effective for priority from the date of filing. However, there is a risk with this type of perfection method in that a centrally-filed UCC financing statement that covers fixtures will be subordinate in priority to any real estate encumbrance, whether recorded before or after the UCC financing statement.

The next option is a financing statement that is filed as a fixture filing. A fixture filing is a defined term under Article 9, and it means a financing statement that covers goods that either are or are to become fixtures, and it has to satisfy not only 9-502(a) like a state level UCC financing statement, but it also has to satisfy the requirements of section 9-502(b). So as far as sufficiency goes, it has to be filed in the filing office designated by Section 9-501(a)(1).

It is important to understand one thing in here. The law governing perfection of a financing statement filed as a fixture filing is the law of the jurisdiction where the goods are located, not the law of the jurisdiction where the debtor is located. So if it's filed as a fixture filing, it has to be in the state where the fixtures and presumably the related real property will be. And the filing office under 9 501(a)(1) is actually the real estate recording office. It would be the same office where a mortgage would be recorded on the affected real property.

It must comply, as I said, with the requirements of 9-502(a) and (b). 9-502(a) is simply name of the debtor and name of the secured party and an indication of the collateral. But because these are going into land records, which have different methods of indexing, 9-502(b) also requires that it indicates it covers the type of collateral. The reason is that if it's filed in the real estate records, it may not say expressly fixtures. It might say all assets or something to that effect. So it needs to indicate that it covers that type of collateral.

It also has to indicate that it is to be filed in the real estate records. There's a couple of different reasons for this. One is there are some jurisdictions still where they maintain both real property and personal property indices. Georgia for example, also Oklahoma County in Oklahoma. And until relatively recently, even after revised Article 9 took effect in 2001, if it didn't indicate it was to be filed in the real estate records, counties would file it in the old, pre-2001 UCC personal property index that they maintained before Article 9 changed the rules to all central filing.

The record has to provide a description of the related real property so that the county recorders can tie it to particular real estate. And if the debtor does not have an interest of record, for instance it might be the beneficiary of a trust that owns the property or they might be a lessee with an unrecorded lease, if that's the case, then they have to provide the name of the record owner so that the county recorder can put it into the grantor-grantee index under the proper name.

Now once the fixture filing has been recorded, it will have priority from the date of recording under the normal revised Article 9 perfection rules. So the general rules apply at least with respect to other UCC records, including records filed at the state level. There's at least one case out there that said a state level UCC filed in the location of the debtor took priority over a fixture filing in the real estate records of a different state because between UCC records, the perfection rules, the general rule will govern.

But when it comes to priority with respect to a record of mortgage or the interest of an encumbrancer, the holder of a fixture filing will have priority from the date the fixture filing was recorded. So they will take priority over a later encumbrancer or even a later owner of the real property under certain conditions. And in the case of a purchase-money security interest can actually jump ahead in line when it comes to priority. But we'll cover purchase money here in just a minute.

Next up is a record of mortgage. A record of mortgage can be filed to be effective as a financing statement filed as a fixture filing, but it is important to note that it is not a financing statement filed as fixture filing. It is a record of mortgage. Now a record of mortgage under Article 9 is broadly defined and includes mortgages, deeds of trust, and any instrument that secures payment or performance of an obligation whatever the name. As long as it's a consensual interest in real property in fixtures, all it has to do is secure payment or performance of an obligation for a consensual interest. Then it will be a record of mortgage.

A record of mortgage is sufficient again if it satisfies all the requirements of 9-502(a) and (b) and then also (c). And like a fixture filing, it has to be recorded in the office designated under the real property law where a mortgage would be recorded on the affected real property. So not only does it have to provide all the information from 9-502(a) and (b), in other words name of the debtor, name of the secured party, indication of the collateral, description of the real property, it has to indicate that it covers fixtures, and it has to have the name of a record owner if the mortgagee doesn't have an interest of record. Obviously, a mortgagee probably will have an interest of record due to the mortgage.

But the one difference is that it doesn't have to indicate it's to be filed in the real estate records because by default the record of mortgage has to be filed in the real estate records. And of course, the record mortgage has to be recorded. As I mentioned, it does not have to be or it does not have to contain an indication that it's to be filed in the real estate records, but it has to satisfy all the other requirements of 9-502(a), (b), and (c).

Now once it's recorded, a record of mortgage that is sufficient under Article 9 will take priority over any state level filing covering fixtures, at least if it qualifies as an encumbrance. I don't think there's been any specific case law on it. It's hard to say, let's put it that way, until the court takes it up, but assuming that a mortgage is an encumbrance, it would take priority over a financing statement filed in the jurisdiction where the debtor is located. But a prior fixture filing would take priority over a record of mortgage. So it's going to boil down to first to file determines priority between UCC records, and it's a little less clear over the record of mortgage taking priority over a state level filing. Although I do believe 9-334(c) does clarify that.

So now I want to talk about fixture filing basics, in other words what goes into a fixture filing, where it's filed, when it needs to be filed, things like the real property description and the like.

When is it necessary to file a UCC fixture filing as opposed to a record of mortgage that is effective as a fixture filing or when filing at the state level on fixtures? Well, fixtures are a valuable portion of the collateral. If they're more than just a minor part of it, it's a good idea to file a fixture filing, unless there's a record of mortgage involved, assuming it meets the requirements for sufficiency under Article 9. And the other thing to remember about that is that the fixture filing or I should say a state level filing on fixtures is going to be subordinate to recorded encumbrances. So it probably makes sense to file a fixture filing rather than a state level on fixtures when the fixtures are a valuable part of the collateral.

Another reason to file a fixture filing even if a record of mortgage is recorded is that the correct debtor name required by a UCC record may be different than that required under real property law for a record of mortgage. And if the record of mortgage doesn't satisfy the Article 9 requirements for a UCC financing statement, then it arguably isn't effective as a fixture filing. So that's a good time to file a fixture filing to protect against the name differences.

Also a purchase-money security interest in fixtures must be perfected by a fixture filing. One cannot perfect by filing in the central office of the state where the debtor is located.

And there may be other reasons to file a fixture filing. Just to be on the safe side a belt and suspenders approach when filing a record of mortgage as well. But generally, if a record of mortgage does meet the sufficiency requirements under Article 9, that would be good enough.

Now as far as the filing location for fixtures, I mentioned earlier that you can cover fixtures by central filing, and that's when the record is not intended to be a fixture filing, but it may cover fixtures. Here the governing law is going to be the law of the state where the debtor is located, and the filing office will be the central filing office under Article 9.

For a fixture filing however, the law governing perfection is the local law of the jurisdiction where the collateral is located. So that can be different, of course, than where the debtor is located. And the proper office within the state is going to be the location where a record of mortgage would be recorded on the affected real property.

Now one area where it's a little foggy for some it has to do with when the debtor is a transmitting utility. The reason is that a filing in the office designated for the filing of a financing statement that indicates the debtor is a transmitting utility under Article 9 is also effective as a fixture filing. So you can have an actual fixture filing made at the state level, but it's not the state where the debtor is located. If you've got a Delaware corporation that is a transmitting utility and has fixtures in Ohio, Pennsylvania, and New York, it would be necessary to file at the central filing office in Ohio, Pennsylvania, and New York to perfect the security interests as a fixture filing in each of those states. Filing in Delaware alone won't serve as fixture filing in those other states.

Now a record of mortgage, the filing location is determined under real property law, and that's all almost always going to be the exact same place where you would file a fixture filing under 9-501(a)(1), the same office where a mortgage would be recorded on the affected real property.

As far as the fixture filing requirements, it has to indicate it covers the type of collateral. Typically that's fixtures, timber to be cut, or minerals to be extracted. The form for filing, the addendum form does have check boxes for that purpose. And again, this requires that indication just in case the description doesn't specifically describe the type, such as all assets or all personal property of the debtor.

It does have to indicate that it's filed in the real estate records if it's a UCC fixture filing, not for a record of mortgage. And this is a requirement for sufficiency of the record under section 9-502. So that check box has to be there, or arguably the record isn't sufficient, even if it meets all the other requirements. So be sure to check that box, and again that's on the addendum form.

It has to contain a description of the real property. Article 9 says it only has to reasonably identify. But in practice, as a practical matter, county offices usually need the full legal description or perhaps a short legal depending on the format typically required by a particular county. But it's a good idea to always provide the legal description. That avoids problems and avoids rejections. Also some counties require the property identification number. It's not a requirement found in Article 9, but they require it nonetheless.

If the debtor does not have an interest of record in the county land records, then it's necessary to provide the name of a record owner. Again, this only happens when the debtor doesn't have an interest of record in the real property records already. So it can be the beneficiary of a trust that owns property, a lessee with an unrecorded lease, and possibly other circumstances.

This is the UCC1 Addendum Form or at least the relevant portion of it. I just wanted to identify where to make the required indications and provide the additional information. There item 14, you have your indications that it's fixtures, timber, or minerals. The indication to file in the real estate records is in item 13. There's a place in item 16 for a description of the real estate, typically a legal description. If it doesn't fit in the box, no problem, just simply put it on an exhibit or schedule and incorporate it by reference. And the name and address of a record owner of the real estate if the debtor doesn't have a record interest.

Now once it's filed, a financing statement that's centrally filed in the location of the debtor will be effective for five years under the general duration and effectiveness rules of Article 9. And that is uniform with one exception, and that is Wyoming, where their general rule is 10 years. For a financing statement filed as a fixture filing, the same rule applies. There's no different rule applicable to financing statements filed as a fixture filing except, of course, in Wyoming. It is effective for five years. And both of these at the state level or at the county level can be continued for as many additional five-year periods as the secured party desires simply by filing a continuation in the six months before the lapse date of each applicable five-year period.

So bear in mind that fixture filings do lapse. They may show up forever in the real estate index, and county recorders often get this wrong. They will tell people, "No, we never purge our system. Fixture filings stay in there forever. You don't have to continue them." That's just plain wrong. The secured party does have to continue fixture filings every five years.

Now a record of mortgage has different rules that apply. It is effective until it's released, satisfied, or ceases to be effective under its own terms, and that's because its effectiveness is determined under real estate law, not the UCC. So really the UCC here is deferring to real estate law for the duration of a record of mortgage. So no continuation statement is required when the record of mortgage is serving as a financing statement filed as a fixture filing. And that is the case even if the county indexes the record both as a fixture filing and as a mortgage. It doesn't really matter if they do that or not. What matters is the filer's compliance with Article 9.

Next I want to talk about the purchase-money security interest. Purchase-money security interests are available for fixtures. The rules are a little bit different. To get a purchase-money security interest and the accompanying purchase-money priority in fixtures, the security interest must be a purchase-money security interest and it has to be perfected by a fixture filing. It cannot be perfected by filing centrally in the 9-501(a)(2) office of the state where the debtor is located. And it must be perfected before or within 20 days after the goods become fixtures. This is different from the normal or the general rule for purchase money in other types of goods. A purchase-money security interest in fixtures and other types of goods has to be perfected before or within 20 days after the debtor receives possession of the goods. Here the debtor could receive possession and they might sit for quite a while before they become fixtures. So it's a little less clear, and I think it's always a good idea to perfect the purchase-money security interest in fixtures at the earliest possible time, even before the fixtures are delivered if at all possible.

So if the secured party does comply with these rules, it does give the secured party priority in the fixtures, even over prior recorded real estate interests. So it's just like at the state level in the central filing office, a purchase-money security interest takes priority over prior recorded security interests in the same collateral. So if it is a properly perfected purchase-money security interest in fixtures, it will take priority over prior recorded real estate interests.

Next I want to talk about amending fixture filings. If it's a centrally-filed financing statement, the amendment rules applicable to any centrally-filed financing statement filed in the location of the debtor are the same. It just has to provide the initial financing statement file number, indicate the type of amendment, and provide whatever additional information is necessary to make the amendment, such as the assignee's name and address in an assignment. So bottom line, there are no special rules for amendments of centrally-filed financing statements that cover fixtures. It's all governed by the general rules of Article 9.

And the same is largely true of a UCC fixture filing, a financing statement that is filed as a fixture filing. Here, the record must, in addition to the normal requirements, provide the information required by 9-502(b). And again, this gets to the record has to indicate the collateral type, file in the real estate records, and so forth. This is always a good idea when filing an amendment. The reason is again we have to go back to the concept the county land record offices are designed to track security interests and other encumbrances on particular property, whereas at the state level, in the central index of a state, the secretary of state or equivalent office, those indices are intended to track interests in a particular debtor's assets. So at the state level, it's debtor centric. At the county level or the real estate land offices, it's property centric.

These are two different concepts, and they lead to two separate types of recording systems. And in order to properly index a record in the land record systems, an amendment to a fixture filing should contain all of this additional information. It is there simply to allow the filing office to index the record in the land records so that it can be retrieved on a search. It's not required there for the benefit of searchers. That information is solely for the benefit of the filing office, to allow them to index the record.

Searchers generally aren't going to care so much about the particular information, other than maybe the description of the real property that's involved. But then again, the filing system under Article 9 is designed with the idea that interested parties are going to have to look beyond the public record to learn the full state of affairs anyway. So the main thing is to get it indexed, and that's what this information is for.

Now when it comes to amending this information, because it's not provided for the benefit of the searcher, the amendment forms were not really designed to provide this information. There's no action on an amendment form for example to amend the legal description or amend the record owner. So how does one go about that because the amendment forms really don't allow that very easily? They have to be kind of tweaked a little bit in order to do it.

There's a couple of ways that I commonly see that people go ahead and file amendments to this real estate information. One of these, and I should clarify that I am not asserting that either one of these is going to be sufficient in a particular situation, you should consult legal counsel when amending information that the form isn't designed to amend. But one option that I commonly see used, and I see no reason why it wouldn't work, is to file an amendment, not check any of the boxes, and then in the collateral field write "AMENDMENT OTHER - See Attached." And then on the attached exhibit or schedule or whatever the filer wants to include, there should be a description that very specifically specifies the intended action and labels the information that the filing office should change. And many filing offices will do that. I can't guarantee that all of them will, especially since some will reject if there's no box checked. In that case, they reject it on the grounds that they can't decipher what the filer intended. And I can understand that. That technically complies with Article 9. But many jurisdictions will index it that way, and that way it's available for a subsequent searcher.

Another option, and this is especially, really the only option in a jurisdiction where they won't accept it with no box checked, is to check the Collateral Change and Collateral Add boxes. And what happens here is it adds to the collateral, although it doesn't delete anything from the collateral or necessarily affect anything else on the financing statement. And then attach the exhibit or schedule that describes the intended action and what the recording office should do with the information and incorporate that by reference. And then have that attached exhibit or schedule there so the filing office can see it and searchers can see it as well.

Now when it comes to the amendment of a record of mortgage, it's a bit different. Article 9 does address assignment of a record of mortgage. Here it says it has to be done in the manner prescribed by law of the state other than Article 9, in other words real property law. And I guess bottom line is if the security interest in fixtures is perfected by a record of mortgage that's effective as a fixture filing, then it has to be done under the real property law of the state where the jurisdiction is or where the record is filed. So Article 9 defers to that.

As far as continuation, a continuation isn't required for a record of mortgage. So it just simply doesn't need to be filed. It's going to be effective until it is satisfied, released, or otherwise ceases to be effective under its own terms, in other words real property law.

And for any other amendment, Article 9 is just simply silent on amendments, and that can be taken to read that amendments other than, you know, really any amendment would be made under state real property law, that that's what would govern it. So again, it's amendments to a record of mortgage should be done in compliance with the state real estate law.

Now there are some traps for the unwary out there when it comes to fixture filings. Again, I mentioned some of the issues of perfection by a record of mortgage. Again, the debtor name requirements for a mortgage or deed of trust under state real property law may be different than for the Article 9 requirements. And one example that stands out is what's required when the property is held in a trust. It is not unusual in real property records and under real property law for the name that's provided on the mortgage for the debtor or grantor to be something along the likes of Jane Doe as trustee under deed of trust dated 1/28/1979. Well, that would not comply with Article 9 because under 9-503(a)(2) or I'm sorry 9 503(a)(3) what's required is the name of the trust if it has a name specified in its organic record, or if no name is specified, the name of the settlor, also known as the grantor or trustor or a testator in the case of a testamentary trust. The name of the trustee is not sufficient under Article 9. Moreover, mortgage records can include things in debtor names or grantor names that wouldn't fly in the UCC world because of the strict debtor name requirements under Article 9. As a result, if the debtor name on the record of mortgage doesn't match the Article 9 requirements, it is always a good idea to file or record a fixture filing in addition to the record of mortgage.

Another trap is relying on the filing office for advice on dealing with fixture filings. Again, county recorders because they don't get a lot of training on this and in their defense they want to do a good job, but I've been told over and over they just don't have anybody to give them training on it, and because of this, they kind of have to fumble their way through it a little bit in some jurisdictions. And they'll apply real estate recording concepts to fixture filings. And the idea is that they see probably 95 to 98 real estate documents for every fixture filing that comes through the door. They don't see a lot of fixture filings. So they tend to impute real estate concepts to them, and that leads to a lot of things like wrongful rejections. We still on occasion see a county, especially one with a new recorder in it, that'll reject for lack of a signature for a party. Just some really strange things.

So bear in mind that filing office advice can be risky in this. Always verify anything that you hear from a county recorder through other methods as well. I mean if you're working with CSC for example, we have our own internal knowledge base and can oftentimes help verify information provided by a county.

Another issue is collateral limitations. A fixture filing only is going to perfect the security interest in fixtures, timber to be cut, and minerals to be extracted, even if other types of collateral are listed. And that's because it's not the right filing office. If it's a fixture filing, the county real estate records not the correct filing office for equipment fixtures and so forth, even if they're located on the real property. Moreover, a record of mortgage can serve as a security agreement for other types of collateral, of course fixtures, but accounts and inventory and equipment, things like that. It can serve as a security agreement, but that type of collateral requires filing at the central filing office of the state where the debtor is located, not in the real estate records.

Also bear in mind there are some non-uniform collateral filing requirements. For example, in Georgia, a security interest in growing crops generally has to be perfected by filing in the real estate records, not in the not in the central index as would be the case in other states.

I'm going to wrap up quick with a discussion of fixture filing searches. Bear in mind that when ordering a search of fixture filings, the search is only going to report UCC records that are filed on UCC forms in the land record offices. It's not going to look for fixtures at the central filing office of the state where the debtor is located unless that's a separately ordered search. And it will not include a record of mortgage that is effective as a fixture filing. The reason there is that it's generally understood that records of mortgage have boilerplate language covering fixtures. So it's understood that if there are records of mortgage out there, that those will generally cover it. If you're ordering a search and want to see all potential security interests in fixtures, it's better to order an ownership and encumbrance search than a UCC fixture search.

Also bear in mind that because many counties still have a manual search process that searches for real estate fixture filings can take longer. We're all spoiled because at the state level we can search electronically in most cases now. Can't do that at all counties.

When it comes to interpretation of the search, bear in mind that many counties never purge fixture filings because they fit into a chain of title so they never remove them, and that means lapsed financing statements may show up for quite a while. Just because it shows up doesn't mean it's effective. If it's past the lapse date, further investigation is going to be required to determine whether it was actually continued or not. And part of the reason for that is that amendments may not be linked to the related financing statement. Some counties can't link them together in their system. So you can run into situations where a search will disclose a continuation or other amendment, but not the fixture filing and vice versa. So it is important to pay close attention to the search results and look for these types of issues and conduct further inquiry as necessary to explain them.

Finally, if there are multiple owners or encumbrancers on the property, a fixture filing filed under the name of one owner may not be disclosed on a search under a different owner's name. So it's important to take a look and see who all has an interest in the property and perhaps search on multiple names to determine whether all the records related to that property are disclosed. And again, the best way to do that is through an ownership and encumbrance search.