Can You Return a Product to Get a UCC-1 Security Interest Removed

[JimInFL]

My question involves a consumer law issue in the State of: Florida

For a neighbor.

A long back story, not germane, but will cover briefly. He has a water treatment system installed on his house. Claims his (former) live in significant other forged the signature. Has provided financing company with the information and filed a police report, but all that is still pending.

He now wants (needs, medical) to sell his home, and there is a UCC financing statement on file. From what I, as a total non-expert, can see it is not a fixture filing. The exact wording on the filing is:

(Section 4 Collateral)
Florida documentary stamp tax is not required
<company brand name - redacted by me> water treatment system

That's all. The question - can he remove (professionally, by a licensed plumber) the system from his home and notify and/or deliver to (and if so, how) the creditor the secured system, thereby rendering the UCC null?

I realize it does not cure the debt, but the issue is to clear the title so he can complete the sale, as the softener obviously cannot convey.

Thanks!

Jim

[pg1067]

Can you clarify what your friend is seeking to accomplish and what the question is that you/he wants answered?

[JimInFL]

"rendering the UCC null" was probably a bad word choice. If the company has a UCC filing on the water treatment system, and the water treatment system is not on the house, then I thought that perhaps there would not be an issue as to title. I do realize that the title company may want the filing removed, but that will be between him and the title company, and I'm already too involved in this in the first place. I assume (yes, I know the consequences) from having UCC filings from financed equipment in the past, that as long as the equipment is not _on_ the house, they can lay no claim to the house. My reasoning based on the fact that filings on my equipment did not encumber anything else I owned. As of now, the title company says they will not insure the title as the system would be assumed to convey with the house, and he cannot do so as long as the filing remains.

To restate as asked. He wants to sell the house. He is not in a position to pay for the water treatment system (and denies responsibility). He is hoping by removing the water treatment system from the house and returning it to the debtor, the house can be sold with a clear title. The issue of outstanding remaining indebtedness is not a part of this discussion (and I am not, as I said, getting further involved).

Thanks!

[PayrolGuy]

Seeing as the unit itself is probably worth less not than is owed on it that would be doubtful.

Has he discussed this with the company that filed the UCC-1?

[JimInFL]

He has, against my advice (I told him to see a lawyer). Naturally all they said is that the UCC will stand until they are paid. I wouldn't have expected more. They are also "investigating" his claim of a forged signature.

The basic logic to my question is:

I have had UCC filings, and both fixture and equipment filings. The fixture filing was for permanent changes to the phase circuitry on my building, which I financed. From what I have read, if the "fixture" wording does not appear on the actual filing then the claim lies only to the equipment. Simplistically, take the thing off the house, sell the house, and deal with the indebtedness and forgery issue later. (Section 9-502(a) and (b)).

Just was hoping I could get a legal opinion if it was possible, or if I have my head in a dark place.

[adjusterjack]

You and your friend are delusional if you think that removing the equipment is going to change anything.

Here's what'll happen.

He removes the equipment.
His buyer goes back to the lender and says the equipment is gone and the UCC filing is no longer valid.
Lender says um, no, we need a recorded document from the company that made the filing saying that the filing is cleared. Otherwise, no money.
Sale falls through because the buyer can't get a mortgage.

Oh yeah, this forged signature business is bogus. He was there when the equipment was installed or has used it ever since. Forgery is a crime. I'm guessing he never reported his live in SO to the police and got her prosecuted for it. Right?

He either pays for the equipment or he doesn't sell the house. At least not to somebody relying on a title search.

[JimInFL]

Your logic does seem reasonable. It was just a thought on my part, and I don't think I would be found to be delusional.

No, the forged signature isn't bogus, I have seen both the contract and his other signatures on legal documents and they are not at all alike. There are no witnesses to the signature (I realize, not required). As both were male, it would not have been a difficult con. He also was not there when the equipment was installed. He challenged the whole issue on the very day he received his first bill. By then S/O, who told him he bought it himself, was gone out of state. As I mentioned he did file a report with the police, and therefore realizes if lying he can be arrested for filing a false report. While I appreciate the reply, it is perhaps not best to denigrate someone without all the facts.

[pg1067]

I guess I am confused by "abilities". I am not suggesting he remove the system personally, as I stated, by a licensed plumber, and obviously at his expense.

You asked, "can he remove" -- i.e., does he have the ability to do it. Can he remove it? Assuming he has the financial means to pay a licensed plumber to do it, I assume the answer is yes. Can he deliver it to the lienholder? Again, I have no idea. That's why I wrote that we have no way of knowing what abilities your friend has.

Perhaps you were only really concerned with the last part of the question: "can he . . . render[] the UCC null?" The answer to that depends on what exactly you mean by that.

"rendering the UCC null" was probably a bad word choice. If the company has a UCC filing on the water treatment system, and the water treatment system is not on the house, then I thought that perhaps there would not be an issue as to title.

Title regarding the real property is not impacted by a UCC-1.

To restate as asked. He wants to sell the house. He is not in a position to pay for the water treatment system (and denies responsibility). He is hoping by removing the water treatment system from the house and returning it to the debtor, the house can be sold with a clear title.

Your friend is the debtor; whoever holds the lien is the creditor.

As mentioned, the UCC-1 against the equipment does not impact the title to the real property. I doubt the creditor will want the equipment returned, but your friend certainly can call and ask about that.

[adjusterjack]

While I appreciate the reply, it is perhaps not best to denigrate someone without all the facts.

You're right. For that I apologize.

But it's so seldom that posters put the RELEVANT facts in the first post. Your last paragraph was certainly relevant. Unfortunately, I doubt if it will change anything.

The lender and/or the title company WILL want a recorded clearance document from the company that filed the UCC no matter what your friend does with the equipment.

Otherwise, the sale isn't going to happen.

Is he getting enough equity out of the property to pay off the debt? If yes, he needs to resign himself to letting it get paid out of escrow.

Then HE can go after his ex BF for indemnification.

[JimInFL]

PG

Thanks. You are correct. I should have more closely watched my word choice.

"Title regarding the real property is not impacted by a UCC-1" Not at all doubting you here. He is being told, relayed by his agent, told to me by him, that the title company won't grant title insurance unless the system is paid and/or removed. The creditor wants no part of the equipment, just their money. I do understand their position.

I think he is best served by doing what I suggested a while ago; see an attorney. An hour of time shouldn't be that great a hardship. There are too many parties involved, and far too much relayed information.

Thank you for taking the time to respond back.

Adjuster

Thank you. I didn't want to make the first post too lengthy, as I didn't think that all those extra facts were relevant to my question. I accept your apology, and offer mine in return for not being more clear.

As I said to PG1067. It is time for me to step out and for him to get the proper counsel to address the issues. Money is very much a factor for him, and with paying off the loan he will, if lucky, break even. He paid too much for the house in the first place. While I certainly feel for him, and like him as a person, it is time for me to step out, and not bother others any further.

Thank you for your time.