Lien Searches and Why They Matter
Before any commercial loan closes, the lender runs lien searches across multiple jurisdictions to identify existing security interests against the borrower or the collateral. Surprises here are common and can delay or scuttle a closing.
UCC Searches
Uniform Commercial Code searches identify security interests filed against business assets — equipment, inventory, accounts receivable. Filings are made at the state level (usually where the entity is organized). UCC searches are standard before any secured commercial loan.
Real Estate Liens
Mortgages, mechanic's liens, judgment liens, tax liens, and HOA assessments can all attach to real estate. Title searches at the county recorder pick these up, but mechanic's liens filed close to closing can slip through.
Tax Liens and Judgments
Federal and state tax liens against the borrower or affiliated entities are particular concerns. The IRS may have a lien position superior to a private lender's security interest. Searches in all states where the borrower has operated are advisable.
Stale Filings
Old UCCs that should have been terminated when prior loans were paid off sometimes linger in the records. These need to be addressed before closing — typically by obtaining a UCC-3 termination from the original secured party.
Educational content only — not advice. KQT Advisors, LLC is a commercial loan broker; we are not a lender, attorney, accountant, financial advisor, or fiduciary. We do not originate loans or make lending decisions. The information in this article is provided strictly for general informational and educational purposes and reflects our understanding at the time of writing. It is not — and must not be construed as — financial, tax, legal, accounting, investment, or any other professional advice, and creates no advisor-client relationship. Loan programs, rates, terms, eligibility requirements, fees, and approval criteria are set by individual lenders, the SBA, and other parties and are subject to change at any time without notice. Examples are illustrative only and not guarantees of outcome. Nothing here is a commitment to lend, an offer of credit, or a representation that any specific structure will be available to or appropriate for any borrower. Always consult your own qualified financial, tax, and legal advisors before acting on any information in this article. To the maximum extent permitted by law, KQT Advisors, LLC and its principals, employees, agents, and affiliates disclaim all liability for any direct, indirect, consequential, or incidental loss or damage arising out of any use of, reliance on, or inability to use the information in this article.