If you are a contractor, developer, or business owner in the construction space, you may have run into this situation before: a supplier you have worked with suddenly files a UCC lien, your bank starts asking questions, and a project that was moving forward smoothly now feels stuck.
UCC filings are not rare in construction, but they are often misunderstood. Worse, they are frequently used as leverage in payment disputes, sometimes aggressively and sometimes improperly. If you do not understand what a UCC filing does and how it can affect your project, your financing, and your business credit, you are already at a disadvantage.
Let’s break down what UCC filings are, how suppliers use them in construction disputes, and what you can do when one is filed against you in Florida.
What Is a UCC Filing in Construction Projects?
A UCC filing refers to a Uniform Commercial Code financing statement, usually called a UCC-1. It is a public filing that gives notice that a creditor claims a security interest in certain property of a debtor.
In construction, suppliers and material vendors sometimes file UCC-1 financing statements to claim an interest in:
- Construction materials
- Equipment
- Fixtures
- Inventory
- Accounts receivable tied to a project
Once filed, the UCC lien becomes part of the public record and can impact your ability to obtain financing, refinance a project, or close a sale.
Why Do Construction Suppliers File UCC Liens?
From a supplier’s perspective, a UCC filing is a way to protect themselves if they are not paid. From the contractor or owner’s perspective, it can feel like a pressure tactic.
Suppliers often file UCC liens to:
- Secure payment when invoices are past due
- Gain leverage in payment negotiations
- Protect priority over other creditors
- Prevent financing or refinancing until payment is made
In some cases, suppliers file UCC liens preemptively, even before a dispute escalates. In others, the filing comes after a disagreement over payment terms, change orders, or alleged defects.
UCC Liens vs. Construction Liens: What’s the Difference?
This is one of the most common points of confusion. A construction lien, often called a mechanic’s lien, is tied directly to real property. It attaches to the land or building itself.
A UCC lien does not attach to real property. Instead, it attaches to personal property or collateral defined in the UCC filing.
However, even though a UCC lien does not cloud title to real estate the same way a construction lien does, it can still cause serious problems:
- Banks may refuse to fund or advance draws
- Lenders may require the lien to be released before closing
- Business credit can be affected
- Negotiating power shifts toward the supplier
In practice, UCC liens can disrupt a project just as effectively as a construction lien.
Can a Supplier File a UCC Lien Without Your Consent?
This is where disputes often arise. A supplier generally must have a valid security agreement granting them a security interest in specific collateral. That agreement is usually embedded in:
- Credit applications
- Vendor terms and conditions
- Supply agreements
- Purchase orders
Many contractors sign these documents without realizing they include UCC security language. Later, when a dispute arises, the supplier relies on that language to justify the filing.
If there is no valid security agreement, the UCC filing may be improper and subject to challenge.
How UCC Filings Are Used as Leverage in Payment Disputes
In Florida construction disputes, UCC filings are often used strategically.
Once a lien is filed, the supplier knows that:
- Financing becomes harder
- Closings may be delayed
- Pressure increases to resolve the dispute quickly
Even if the amount in dispute is relatively small, the impact of the UCC lien can be disproportionate. That is why these filings are sometimes used less as protection and more as leverage. This does not mean every UCC filing is improper. It does mean they should be scrutinized carefully.
What Happens If a UCC Filing Is Wrong or Overbroad?
UCC filings must accurately describe the collateral and reflect a legitimate security interest. Overbroad filings that claim “all assets” without a valid basis can be challenged.
If a UCC filing is wrongful or exaggerated, you may have options to:
- Demand termination of the filing
- File a legal challenge to remove it
- Seek damages if the filing caused harm
- Use litigation to rebalance negotiations
Ignoring a wrongful UCC filing is rarely the best approach. These filings do not disappear on their own, and the longer they remain, the more damage they can cause.
How UCC Liens Affect Construction Financing and Development
From a practical standpoint, lenders care deeply about UCC filings.
Banks and private lenders routinely run UCC searches before:
- Funding construction loans
- Advancing draws
- Refinancing
- Closing sales or transfers
An unresolved UCC lien can:
- Delay funding
- Increase interest rates
- Trigger default provisions
- Kill deals entirely
This is why UCC disputes often escalate quickly in construction projects. Time is money, and unresolved filings cost both.
What to Do If a Supplier Files a UCC Lien Against You
If you discover a UCC filing against your company or project:
- Do not ignore it
- Identify the alleged security agreement
- Review whether the filing matches the agreement
- Assess how it affects financing or operations
- Consult counsel before responding
In some cases, negotiation resolves the issue. In others, litigation is necessary to remove improper leverage.
How a Construction Litigation Attorney Can Help
UCC disputes sit at the intersection of construction law, commercial litigation, and secured transactions. They are not just paperwork issues.
An experienced construction litigation attorney can:
- Evaluate the validity of the UCC filing
- Challenge improper or abusive liens
- Negotiate releases strategically
- Protect your financing and project timeline
- Litigate when suppliers cross legal boundaries
The goal is not just to remove a lien, but to prevent it from being used unfairly against your business.
Final Thoughts
UCC filings in construction are powerful tools. When used properly, they protect suppliers. When used aggressively or improperly, they can disrupt entire projects.
Understanding how UCC liens work and responding quickly can make the difference between a resolved dispute and a stalled development.
If a supplier has filed a UCC lien against you, or you are concerned one may be coming, contact one of our experienced attorneys in Miami at 305-570-2208.
You can also contact our team directly at: arianna@ayalalawpa.com
Schedule a case evaluation online here.
[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].
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