Common Mistakes in Secured Agreements That Can Cost You

Secured lending is designed to reduce risk—but when agreements are poorly drafted or improperly executed, the creditor can lose more than they bargained for. From invalid liens to uncollectable debts, small mistakes in secured agreements can lead to big losses. 

Here are the most common (and costly) errors we see in secured transactions—and how to avoid them. 

1. Vague or Incomplete Collateral Descriptions 

A secured agreement must clearly define what property is being used as collateral. If the description is too vague, the lien could be unenforceable or challenged in court. 

Fix it: 

Use specific legal language. Include serial numbers, inventory categories, or detailed property types when needed. 

 2. Filing in the Wrong Jurisdiction 

UCC filings must be made: 

• In the debtor’s state of organization (for businesses) 

• In the debtor’s primary residence state (for individuals) 

If you file in the wrong place, your lien may not be enforceable or discoverable in a lien search. 

3. Not Perfecting the Security Interest 

Some security interests require additional steps beyond the agreement—such as possession of collateral, control over deposit accounts, or filing a UCC-1. 

Fix it: 

Understand what’s required for perfection based on the type of collateral. 

4. Overlooking Prior Liens or Claims 

Failing to do a lien search means you may be second—or third—in line behind other creditors, even if your agreement is airtight. 

Fix it: 

Run a UCC lien search before entering the agreement. You can’t enforce priority you don’t actually have. 

5. Not Updating or Renewing Filings 

UCC-1 filings expire after five years. If not renewed on time, your lien disappears—even if the debt isn’t paid off. 

Fix it: 

Track your filing dates. File a continuation statement within six months before expiration. 

At Title Stream, we review secured agreements and filing procedures to ensure your lien is enforceable, valid, and prioritized—so you’re protected when it matters most.