What effect does filing a UCC-1 Financing Statement have?

Filing a UCC-1 Financing Statement primarily serves to provide record notice to third parties about a secured party’s interest in the debtor's collateral. This means that when a financing statement is filed, it is accessible to the public, and potential creditors or interested parties are made aware that the secured party claims a security interest in specific assets owned by the debtor.

This is significant because it establishes a priority system among creditors. By filing the statement, the secured party ensures that their claim against the collateral is duly recorded, which can influence the rights of subsequent creditors or potential buyers of the collateral.

In terms of perfection, while filing does achieve perfection of the security interest in many cases, it does not automatically create ownership rights in the collateral, as ownership is subject to the underlying agreements and laws governing the transaction. Thus, while filing the financing statement has several effects, its primary and most critical effect is providing record notice to third parties, allowing them to see that a particular collateral has a secured claim against it.