How to Get a UCC Lien Filed by an MCA Funder Removed

By MercResolution · Published 2026-08-29 · Updated 2026-09-07

An MCA funder's UCC lien comes off only when a UCC-3 termination is filed. Here is who can file it, what your payoff or settlement letter must say, what to do when the funder ignores you, and what lapse after five years does.

A UCC lien filed by an MCA funder comes off only when a UCC-3 termination statement is filed in the same filing office that holds the original UCC-1. The secured party of record is supposed to file it, and Article 9 of the Uniform Commercial Code gives you a written demand procedure and a right to file it yourself if the funder does not respond in time. Paying off or settling the advance does not remove the lien by itself, so the funder's obligation to terminate belongs in your payoff letter.

This article covers what the filing is, who can terminate it, what to put in writing before you pay, the short clock the funder is on once you demand a termination, what to do when it ignores you, what lapse after five years does and does not do, and how to deal with a filing the funder was never authorized to make. A lien that should have come off months ago can still block a bank line, an SBA loan or an equipment deal today.

"The advance had been paid off for a year and the owner assumed the lien went with it. Nobody filed the termination, the funder had changed hands, and a bank declined a line of credit over a filing that secured nothing. It should have taken one paragraph in the payoff letter."

What the UCC Filing Is and Why the Funder Made It

A UCC-1 financing statement is a public notice, filed with the Secretary of State in the state where your business is organized, that a secured party claims an interest in described collateral. MCA funders file one even though their contracts call the deal a purchase of receivables, because Article 9 treats a sale of accounts the same way it treats a security interest: the buyer perfects its claim by filing. Most MCA filings describe the collateral as all assets of the business, not just the receivables.

The filing has three parts worth reading: the debtor name, which must match your legal name; the secured party name, which may be the funder, an affiliate, or a collateral agent acting for it; and the collateral description. Search the filing office's records for your exact legal name and any prior names first; you cannot terminate a filing you have not found. What the lien lets a funder do while the advance is open is explained in understanding UCC liens filed by MCA funders.

Only a UCC-3 Termination Takes It Off

The UCC-3 is the amendment form for an existing filing. It is used for continuations, assignments, changes to the collateral or the parties, and terminations. A termination is the only amendment that ends the filing's effectiveness. Until one is filed, the original UCC-1 sits in the public index looking exactly the same whether you owe the full balance or nothing.

The termination must be filed by, or authorized by, the secured party of record. That is the name on the UCC-1, or the assignee if an assignment was filed. When an advance has been sold to a debt buyer or placed with a collection firm that never filed an assignment, the original funder is still the party that must act. A letter from a funder saying it "releases its interest" is not a termination, and a wire confirmation is not a termination. The filing office needs the form, and lenders searching your name need to see it in the index.

What Your Payoff or Settlement Letter Must Say About the Lien

Most lien problems after an MCA are created before the money moves, by a payoff letter that never mentions the filing. Before you pay, the funder's letter should identify every financing statement by filing number, state and date; state that on receipt of the payoff or the final settlement payment the obligation is satisfied in full; commit the funder to file a UCC-3 termination for each filing within a fixed number of days; and commit it to deliver a file-stamped copy showing the filing number. If the settlement is paid over time, it should say when termination happens.

Two more items belong in the same letter: a release of the personal guarantor, and withdrawal of any notices the funder sent to your customers or your card processor directing payments to it. Those notices do not expire on their own either.

Getting the Termination Filed After You Pay

When the Funder Ignores You

If the secured party neither files nor sends a termination within the statutory period after your demand, Article 9 permits you to file the termination yourself, with the statement indicating that the debtor filed it because the secured party failed to respond. Use it only when no obligation actually remains; a termination filed while a balance is still owed can be treated as unauthorized and can hand the funder a claim of its own. Article 9 also provides damages remedies against a secured party that fails to comply with a proper demand; those belong in a conversation with counsel.

A second tool is the information statement, which lets a debtor add a record to the index stating that a filing is inaccurate or was wrongfully filed. It does not remove the filing, but it puts your position on the public record for anyone who searches. If you would rather have someone chase the funder for you, that is part of what the free 30-minute consultation covers; you can request the free, confidential analysis or ask Stephanie through the chat button to set it up.

Lapse After Five Years, and What It Does Not Do

A financing statement is effective for five years from its filing date. It lapses unless the secured party files a continuation statement during the six months before it expires. Many MCA funders never continue, so an old filing on a long-settled advance often lapses on its own, and a lapsed filing no longer perfects anything.

Lapse fixes less than owners hope. It does not extinguish the debt or the personal guarantee; a funder that is still owed money can sue within the statute of limitations whether or not its filing is current. A lapsed filing can also remain visible in searches for a period afterward, and a cautious lender may still ask for a termination or an explanation. Treat lapse as a backstop, not a plan.

When the Filing Was Never Authorized

You authorize a UCC filing by signing the agreement that grants the interest. Filings made before funding on a deal that never closed, filings by a funder that declined you, filings against the wrong entity, and filings whose collateral description goes beyond what the agreement grants are unauthorized. The remedy runs on the same track: a written demand, the statutory waiting period, a debtor-filed termination if the funder is silent, and an information statement in the meantime. Some states, Texas among them, also have statutes addressing fraudulent filings against a business; counsel can tell you whether they apply.

Blanket liens that block new financing

A new lender wants first position on the assets it is financing, and an all-assets MCA filing sits ahead of it. The usual fixes are a payoff-and-terminate at closing funded from the new loan, a partial release for specific equipment, which funders grant reluctantly, or a settlement that includes termination before you apply. The difference between blanket and equipment-specific filings is explained in blanket liens versus equipment UCC filings, and what happens when tax liens sit in the same stack is covered in tax liens and MCA UCC liens stacking. Once the index is clean, rebuilding business credit after a settlement is the next step.

Where MercResolution Fits

MercResolution is a commercial debt resolution firm in Houston, Texas. When we negotiate a payoff or settlement with an MCA funder, the lien is part of the deal, not an afterthought: the written agreement names every filing, sets a deadline for the termination, requires the file-stamped copy, releases the guarantor and withdraws customer notices. After payment we track the filing office until the termination appears, and when a funder has vanished or refuses, we coordinate with licensed attorneys on the demand and the debtor-filed termination. Our how it works page describes the process.

We are not a law firm and we do not file court actions ourselves. The first conversation is a free, confidential analysis that tells you which filings exist, which are still secured by anything, and what it will take to clear them.

Frequently Asked Questions

Does paying off an MCA automatically remove the UCC lien?

No. The filing stays in the public index until a UCC-3 termination is filed, and payment does not file anything. Get the funder's written commitment to terminate before you pay, then confirm the termination appears in the filing office's records. If the funder does not act, Article 9's demand procedure gives you a way to force the issue.

How long does an MCA funder have to file a UCC termination?

For ordinary business collateral, most states' version of Article 9 gives the secured party twenty days after receiving your written demand to file the termination or send it to you. Before a demand is made, there is usually no clock at all, which is why the demand matters. Verify the period in the state where the filing sits.

Can I file a UCC-3 termination myself?

Yes, in a specific situation: no obligation remains, you have sent an authenticated demand, and the secured party failed to file or send a termination within the statutory period. The debtor-filed termination must indicate that it was filed by the debtor for that reason. Filing one while a balance is still owed is a mistake that can create liability.

Does a UCC lien from an MCA expire on its own?

A financing statement lapses five years after filing unless the funder files a continuation in the final six months. Lapse ends the filing's effectiveness but not the debt or the guarantee, and the old record may still appear in searches for a time. If you owe nothing, a termination is cleaner than waiting for lapse.

What if the funder that filed the lien no longer exists?

Send the demand to the secured party of record at the address on the filing, and to any assignee you can identify. If no one responds within the statutory period, the debtor-filed termination is available. Where the record is tangled, for example an unrecorded sale of the account, counsel can seek a court order; keep every piece of proof that the advance was paid.

This article is for educational purposes only and is not legal, tax, or financial advice. MercResolution is not a law firm. Every situation is different — get a free, confidential analysis of your specific circumstances.