Newbie Q: to buy or not to buy foreclosure with ucc lien

7 Replies

Hi all, I'm pretty new to investing in real estate in the US and so sorry if this question sounds redundant! 

A property I'm interested in has this note on it

NOTE: Property is subject to a UCC Lien. Per Seller‚ Sellers title company may insure over the UCC lien. Buyer should confirm with Closing/Escrow company. 

1. How do find out what the amount of the UCC lien is and can i get title insurance to protect me when i buy the property?

2. in the Title insurance provided on auction.com (Dated aug 2016) I found some information about liens. How do we find out if these were paid off?

The liens you identified are not UCC liens.

UCCs are typically not liens against real property but rather personal property such as solar panels.

If the title company can insure over the UCCs just make sure they don’t appear on title commitment as special exceptions.

This is why solar leasing is terrible. So much misinformation. When you lease solar panels they put a UCC lien on the equipment true to hedge against you defaulting. HOWEVER in the case of a sale it becomes enforced as a lien to ensure the finance company holding the paper on your equipment doesn't get discarded with the new owners. This is the common issue in all 50 states and solar leasing companies do NOT want to transparently address it. Here's a link for you on how resi solar actually works in the event of a sale.  https://financere.nrel.gov/finance/content/residen...

In this notice the line - Financiers can take security interests as per the UCC, which is a set of legal rules for creating and enforcing rights in property subject to sales, leases, loans, and other types of transactions 

In other words it's harmless as long as you live there and payments if any needed are being made. Once any of the detailed signal a flag it's no longer a happy harmless "Just a UCC filing" 

Originally posted by @Ted Strzelecki :

This is why solar leasing is terrible. So much misinformation. When you lease solar panels they put a UCC lien on the equipment true to hedge against you defaulting. HOWEVER in the case of a sale it becomes enforced as a lien to ensure the finance company holding the paper on your equipment doesn't get discarded with the new owners. This is the common issue in all 50 states and solar leasing companies do NOT want to transparently address it. Here's a link for you on how resi solar actually works in the event of a sale.  https://financere.nrel.gov/finance/content/residen...

In this notice the line - Financiers can take security interests as per the UCC, which is a set of legal rules for creating and enforcing rights in property subject to sales, leases, loans, and other types of transactions 

In other words it's harmless as long as you live there and payments if any needed are being made. Once any of the detailed signal a flag it's no longer a happy harmless "Just a UCC filing" 

So we are still speculating on what the UCCs in question relate to. But assuming they are solar, the lien (if any) created by their filing would be against the solar components only. And since the new buyer never signed the solar loan paperwork or the UCC, what remedy would the solar company have if new buyer says "No thanks, don't want these and won't pay for them" other than removal?

Thanks for your insight.

Hey Tom,

  In that instance the one who signed the lease is then responsible to pay in full, the agreed upon price when the contract was signed. (Usually buried upon the 20 something pages of the contract) Otherwise the sale of the house can actually be blocked if the UCC is not satisfied. This occurs when the sale price doesn't have enough equity after home sale and note repayment. Otherwise it is subtracted from the sale. Just like a lien. 

Originally posted by @Ted Strzelecki :

Hey Tom,

  In that instance the one who signed the lease is then responsible to pay in full, the agreed upon price when the contract was signed. (Usually buried upon the 20 something pages of the contract) Otherwise the sale of the house can actually be blocked if the UCC is not satisfied. This occurs when the sale price doesn't have enough equity after home sale and note repayment. Otherwise it is subtracted from the sale. Just like a lien. 

As I thought... but in this case we are dealing with a foreclosure. The party who signed the solar contract is long gone and presumably doesn't care one bit about that payment obligation. And I would imagine this REO seller's position is nope, we aren't paying that. Again, this "lien" did not somehow transform into a lien on the real property, from what I understand.

Will be interesting to hear how this plays out.

Originally posted by @Tom Gimer :

So we are still speculating on what the UCCs in question relate to. But assuming they are solar, the lien (if any) created by their filing would be against the solar components only. And since the new buyer never signed the solar loan paperwork or the UCC, what remedy would the solar company have if new buyer says "No thanks, don't want these and won't pay for them" other than removal?

Thanks for your insight.

Hi all! Wow this was all so helpful. Wish I'd found this forum sooner . The auction.com listing has a bunch of documents but as I am new to this not sure how to identify whether the liens are solar or not. Here is listing: https://www.auction.com/details/8500-via-gwynn-way...

The property is currently empty (which for a newbie is a good thing I guess because it saves the need for an eviction) but how do I find out why the owners abandoned it or where they went...i'm guessing they are still alive, but in case not, is it possible to find out if inheritors are involved so may make a claim later?

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