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Real Estate Financing: Benefits of the UCC Insurance Policy

Some of the large land-title insurance companies now offer Uniform Commercial Code ("UCC") insurance policies. UCC insurance provides indemnity insurance for the attachment, priority, and perfection of the lender's security interest (there also is a buyer's policy available) and transfers the risk of failing to properly create, perfect, or attain the desired priority of, the lender's security interest to the insurer. (These policies may be examined on the websites of the title insurers that offer this product.) For a single premium, the lender who purchases a UCC insurance policy (and its counsel) obtains, in addition to an insurance policy that provides full legal-defense costs, the benefit of systems and procedures specifically designed to assure compliance with the UCC, including legal and procedural changes thereto under the 2001 revisions to Article 9 ("Revised Article 9"). Revised Article 9 changed the manner in which commercial loan security interests are granted, perfected and enforced, including filing forms, filing jurisdictions and in certain cases, the manner in which collateral is described.

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