A recent CSC Transaction Watch post says those who conduct UCC searches are responsible not just for finding all the relevant records, but also for correctly interpreting the results. An accurate interpretation requires access to information that is not available in the public records. An interested party must conduct further inquiry of the parties involved to learn the full state of affairs. Relying solely on the public record can prove costly, as the buyer of equipment learned in the recent case of Bishop v. Alliance Banking Company, 2013 Ky. App. LEXIS 151 (Ky. Ct. App. Oct. 11, 2013).
The important thing to take away from this case is that those who search the UCC records cannot take search results at face value. A financing statement, including related amendments, merely serves as the starting point for further research by interested parties. Those who rely exclusively on the UCC records without conducting additional inquiries significantly increase their risk if the debtor later defaults.
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