What’s the difference between pay-off letters and UCC-3s? I though pay offs were for accounts, whereas UCC-3 (obviously) are for liens. Partner is asking for both for all liens that popped up in lien searches

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A payoff letter is written confirmation by a lender that when the debt is repaid, they will release certain claims and, usually, promise to file any UCC3s to the extent it's a secured loan. These are a closing deliverable in most cases. UCC3s are termination statements that get filed with the applicable SOS once the debt is paid (usually post-closing). You will sometimes have payoff letters for unsecured debts, but, obviously, you wouldn't need a UCC3 for those. It's normal that the partner wants both. Edit to clarify: this is assuming you're in M&A and there's more nuance to it, but this is the 2 second summary.

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Some pay off letters authorize borrowers counsel to file the UCC-3 themselves upon confirmation of payoff as well.

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If the debt is outstanding and will be paid off with loan funds, you’ll need a payoff letter to confirm the dollar amounts and draft releases. If it’s a lingering filing that has been paid off, release should be sufficient.

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Partner wants you or borrower to contact all the lien holders and get payoff instructions. Or, if debts have been satisfied get a release.

Is this in the context of real estate/mortgages? Payoff letters usually state the amount needed to pay off the lien and are provided by the bank/lienholder. UCC3s are used for amending or terminating UCC1s, which is the initial statement filed for the lien. They’re not really related to each other and a payoff letter wouldn’t show up on a lien search. Assuming you’re in NY, UCC1s filed in the county and/or state would show up on the searches.

TL;DR Version-

Payoff letter is something you get from a lender designating the amount needed to pay off a loan and the lenders agreement to release collateral, etc. once that amount is paid.

UCC-3 is the standard document that is filed with SOS to officially terminate a secured position in collateral.

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