When you lend against the assets you sell, securing those assets is critical. Fixture liens are one of the methods you can use to protect your interests. A fixture lien is a legal claim you place on a borrower’s property – usually on the fixtures that are attached to real estate, such as an HVAC system, windows, and equipment like solar panels. These liens ensure that you have a right to the assets should the debtor default.
However, the process of filing fixture liens is complex. Any errors or omissions can jeopardize your ability to enforce your claim. Mistakes end up being costly because they can lead to legal disputes and financial losses. Automated solutions streamline the process, significantly reduce the risk of errors, and ensure your interests are fully protected.
Pitfalls of manual filing
Manually filing a fixture lien can lead to several pitfalls, which undermine your efforts to secure assets. These include:
- High error rates: Any mistake, whether it be a small typo or an inaccurate property description, can lead to your filing being rejected by the county clerk. Our statistics indicate- that manual filings can have rejection rates as high as 22 percent, meaning one out of every four filings may be turned down due to errors. The need to fix and resubmit the filing causes delays and increases your workload.
- Time inefficiency: Handling lien documents manually can burden internal resources, requiring staff time and diverting experienced employees from other duties. This process could be slower, resulting in possible delays in asset protection, and may affect your organization's efficiency and budget.
- Increased costs: Rejected filings are costly and time-consuming. Correcting errors and submitting new paperwork for each rejection leads to additional fees. This cycle may need to be repeated multiple times, ultimately driving up labor costs and cutting into profits. This challenge is magnified when dealing with complex documents such as fixture filings.
- Asset loss and lapsed filings: One of the most serious risks of manual filing is the potential of losing priority over assets should the debtor file bankruptcy or sell the house without your knowledge. If a lien is rejected, not filed in a timely manner, or a filing lapses and you do not renew the filing timely, it may leave assets unsecured during the bankruptcy.
Challenges in manual fixture lien filing
When you file fixture liens manually, you can run into several challenges that complicate the process and put yourself at risk. They not only make the process cumbersome but increase the likelihood of errors and delays. Challenges in manual fixture lien filing include:
- Property information: Fixture lien filings require accurate property information. Manual processes usually rely on incomplete or outdated data, which leads to inaccuracies in lien documents and rejected filings.
- County requirements: Each of the +3600 jurisdictions in the US has its own specific requirements for fixture lien filings. You must know all county requirements, which can be complex, depending on the county. Without familiarity with each county’s requirements, you could file fixture liens with errors and be subject to delays and rejected filings.
- Filing jurisdiction: Determining the proper jurisdiction for filing fixture liens is not always straightforward. You need a thorough understanding of where the property is located and which jurisdiction has authority over it. If you file a fixture lien in the incorrect jurisdiction, the lien is most likely ineffective, which leaves you unprotected.
- High volumes: When you manage a large number of loans, you face the additional challenge of high-volume filing, which can overwhelm staff and lead to mistakes and inefficiencies. Just the volume of paperwork can increase errors, including missed deadlines and other issues that can leave your assets unsecured.
- Long turnaround times: Manual fixture lien filings are slower, which means longer turnaround times. Delays can leave you vulnerable since your lien may not be secured in time to protect your interests.
Benefits of automating the fixture filing process
Automating the fixture filings process offers a range of benefits that address the challenges of manual fixture lien filings. These include:
- Improved accuracy
- Time savings
- Cost reduction
- Enhanced asset protection
- Automated monitoring for continuations
- Streamlined workflow
- Decrease in rejection rates
Features of fixture lien filing solutions
Fixture lien filing solutions have many features that simplify the process, protect your interests and enhance accuracy. Some of the features of automated fixture filings solutions include:
- One-step filing process: You can complete filings quickly and effectively instead of navigating multiple databases, forms, and procedures. The one-step process should only require you to request the UCC and the process then integrates preparing, verifying and submitting the lien, reducing the chance of errors and speeding up the filing process.
- Built-in legal description searches: Legal description searches are one of the most time-consuming parts of manual filing. Some of the automated fixture filing solutions conduct searches for legal descriptions from trusted sources, ensuring the information used in your lien filing is accurate and up-to-date.
- Correct jurisdiction selection: Determining the correct jurisdiction is crucial in ensuring the lien is enforceable. Fixture filing solutions identify the appropriate jurisdiction based on property location and other relevant requirements. This feature eliminates guesswork and reduces the risk of filing in the wrong jurisdiction.
Rejection handling: Even with the best processes, rejections can still happen due to factors beyond your control, such as unforeseen errors in public records and administrative changes. Fixture lien filings solutions should be able to handle those exceptions on your behalf.
The importance of adopting automation
In today’s fast-paced lending environment, staying competitive means protecting assets with precision and efficiency. Automating fixture filing processes will offer a range of benefits that are essential for today’s lenders and make the transformation from filing manually a necessity.
You can save significant time by streamlining the filing process with improved accuracy. You will significantly reduce the risk of errors that can lead to rejections. Fixture lien filing solutions also monitor for lien continuations, which reduces the risk of lapses and keeps your assets secured.
To learn more about how automation can revolutionize your fixture filing process and protect your assets more effectively, watch our on-demand webinar where industry experts dive deeper into these solutions.