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A UCC 3 Subordination is a form used when more than one lender has an interest in the same collateral. In this situation, a subordination agreement should be signed in order to establish the order in which the lenders will be refunded the money.

Now, for example, let's say you want to take a second mortgage with Bank#2. Bank#2 will search the Secretary of State records and find that Bank#1 has already lent you money. Bank#2 will not get its money back until Bank#1 has been paid in full so its interest is referred to as "subordinated".

You must pay off or refinance the debt to eliminate the UCC filing. But in some cases, you may need to take further steps to remove the UCC lien from your credit report. In some cases, you might need to dispute the lien or enlist the help of an attorney to protect your business.

An Example of a UCC Lien Filing If you secure equipment financing, the lender will file a UCC lien to state that if the debt for the espresso machine is not repaid, the lender has the right to repossess the espresso machine or seize other assets from your business.

Filing is short for "electronic filing." It is the process of filing court papers using a computer instead of handing them to a court clerk in person. Michigan uses a software system called MiFIL for the eFiling process. You can log into MiFIL on any computer with Internet access.

The case can be filed in the district court where the incident occurred or in the district court where the defendant lives. The filing fee varies with the amount of the claim. The circuit court handles the case if the amount of the claim is more than $25,000.