Want to Learn More?
Drop us a line. We'd love to hear from you!
Holy Cow! Agricultural Liens vs UCC Secured Livestock
If you’ve ever asked yourself the question “Is it possible to secure a loan with livestock?” then you’re in the right place.
The relevant place to look is under “Farm products” in Article 9 of the UCC, which governs security interests and financing for everything from unprocessed livestock to raw peas and carrots.
The statutory framework that guides security interests for agricultural financing is distinct and therefore quite confusing. In order to maintain priority position, lenders and other secured parties must understand the difference between a UCC security interest in farm products and agricultural liens.
Agricultural Liens vs. UCC Secured Livestock
The goal of both agricultural liens and UCC security interests in farm products is to create an obligation for payment, but the context is different and they accomplish this goal in different ways.
A security interest in farm products is created under the UCC; it emerges as a result of an agreement between parties, typically banks/commercial lenders and farmers.
Agricultural liens, like PACA liens, are generally used by suppliers. Like other types of liens, they are triggered by state statute, with or without the consent of the debtor. They do not require possession of the farm products themselves.
UCC Security Interests in Farm Products
Banks and other secured parties generally perfect their security interests in farm products with a UCC-1 filing. The collateral description in these financing statements may describe the farm products: specifically, by type, or with a generic catch-all phrase like “all assets.”
Unique Livestock Rules: Purchase Money Security Interest
Now, if the loan is to provide purchase money for livestock—a Purchase Money Security Interest (PMSI)— the secured party is required to file its financing statement before the debtor receives possession of the livestock, similar to PMSI in inventory. The one difference is a PMSI notice for livestock has a much shorter effective period: 6 months compared to five years for inventory PMSI.
Contact AADS for UCC Lien Litigation & Corporate Services
All American Document Services makes it easy to view all relevant risk information about any individual or company, either on an ongoing basis or on demand. We monitor everything from UCC liens to litigation and perform detailed searches, whether you need a Bankruptcy Search, UCC Lien Search, Patriot Act Search or Background check.
Leave a Reply
May 13, 2019
Florida is a lien theory state, which means the property acts as security for the underlying mortgage loan. The legal instruments that establish a Florida ...READ MORE
Apr 29, 2019
Florida’s adverse possession law is a unique law that allows a trespasser to gain possession of the private property they have trespassed upon. Court cases ...READ MORE
Apr 11, 2019
There are two things you absolutely need to know if you're considering purchasing a business in Florida: the legal standing and the financial standing of ...READ MORE