According to Paul Hodnefield in his recent article for the Corporation Service Company’s website, when secured lenders work with farming operations, one of the more challenging aspects is navigating and understaning public record filings. The article examines the intricacies of UCC financing statements, agricultural lien financing statements, and Effective Financing Statement (EFS) records in an effort to ease the burden of secured lenders who accept collateral in the form of farm products.
“One of the challenges for secured lenders to farming operations is sorting out the variety of public record filings related to these transactions. Unless a secured party regularly engages in farm lending the differences between UCC1 Financing Statements, Effective Financing Statements and agricultural liens may not be clear. The issue is clouded further because the different types of records may be very similar in appearance. As a result, some secured lenders tend to blur the distinctions and assume they all have the same purpose or result.
Each of these “farm filings” has a distinct purpose and legal effect. Secured parties need to understand the role that each plays in farm lending to correctly interpret search reports and to file the correct records necessary to fully protect a security interest. This article helps cut through some of the misconceptions and explains the unique role that each of these records plays in farm-related secured transactions.”
You can find Hodnefield’s full article here.