Jan22026
Real Estate Q&A Series

Who can release the UCC lien if the loan went to a collection agency but the solar company says the collector doesn’t actually hold it? – North Carolina

Short Answer

In North Carolina, the party that can release (terminate) a UCC lien is the secured party of record on the UCC filing, or a party that can prove it has become the secured party through an assignment. If a loan was sent to collections but the collector does not actually own the debt or the security interest, the collector usually cannot sign a valid UCC-3 termination. When the secured party cannot be identified or will not cooperate, the practical solution is often to obtain a written payoff/release from the secured party of record or pursue a court order that clears the record so the sale can close.

Understanding the Problem

In North Carolina, who can release a UCC lien often turns on one decision point: who is the “secured party of record” for the UCC filing that appears in the public records. The common situation is that a solar-related loan is placed with a collection agency, but the original company says the collector does not hold the lien. The practical question becomes: can the collector sign the termination, or must the secured party shown on the filing (or a proven assignee) sign it so the lien clears for a pending home sale.

Apply the Law

A UCC lien is typically released by filing a UCC-3 termination statement that is authorized by the secured party of record (the party listed as the secured party on the UCC financing statement) or by a party that has become the secured party through an assignment that can be documented. In North Carolina, UCC filings are generally handled through the Secretary of State’s UCC system, while liens that are recorded in land records are handled through the Register of Deeds and, for certain lien discharge procedures, the Clerk of Superior Court. The key trigger is the identity and authority of the party signing the release; if the wrong party signs, the filing may be rejected or may not satisfy a title company.

Key Requirements

  • Correct releasing party: The termination must be authorized by the secured party of record (or a documented assignee), not simply the company collecting payments.
  • Proper release document: For a UCC lien, this is usually a UCC-3 termination that matches the original filing number and debtor name; for a recorded real-property lien, it may require a satisfaction/release recorded in the county land records.
  • Clear chain of authority: If the debt was sold, the releasing party should be able to show an assignment (or other proof) that it owns the secured interest and has authority to terminate.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The facts describe a home inherited by deed and a pending sale that is being delayed by a lien that someone has called a “UCC lien.” If the public record shows a secured party (often the solar lender or its financing affiliate), that party is usually the one that must authorize a UCC-3 termination. If the account was sent to a collection agency but the collector does not actually own the debt or the security interest, the collector may not have authority to terminate, which explains why attempts to file a termination have been unsuccessful.

Process & Timing

  1. Who files: Usually the secured party of record (or its authorized agent), and sometimes the owner’s closing attorney coordinates. Where: For a UCC termination, typically with the North Carolina Secretary of State UCC filing system; if the issue is a recorded lien on real property, the county Register of Deeds and/or the Clerk of Superior Court may be involved. What: A UCC-3 termination statement that references the original UCC financing statement filing number and uses the debtor name as shown on the original filing. When: As soon as the secured obligation is satisfied or when the secured party agrees to release; for a time-sensitive closing, this should be treated as urgent.
  2. Confirm who has authority: Request a written “secured party of record” confirmation and, if applicable, a copy of any assignment showing the lien was transferred. If the collector claims authority, ask for documentation that it owns the debt and the security interest (not just that it is collecting).
  3. Clear the record for closing: If the secured party of record will not sign and there is a dispute about who holds the lien, the next step is often a court-backed solution (for example, an action seeking an order that determines the lien status or directs a release), or another title-acceptable method to remove the cloud from title.

Exceptions & Pitfalls

  • UCC filing vs. real-property lien: Solar transactions sometimes involve more than one recorded item (a UCC filing and a separate recorded instrument). Clearing only one record may not satisfy a title company.
  • Wrong party signs: A collector that is only servicing the account may not have authority to terminate. A termination filed without proper authorization can be rejected or challenged.
  • Name and filing-number mismatches: UCC terminations often fail when the debtor name, filing number, or secured party information does not match the original financing statement exactly.
  • Office mismatch: A UCC-3 is generally filed through the Secretary of State, while many real-property lien releases are recorded in county land records. Filing in the wrong place can waste critical time before closing.

Conclusion

In North Carolina, a UCC lien is typically released by a UCC-3 termination authorized by the secured party of record (or a documented assignee), not simply a collection agency that is trying to collect the debt. When the solar company says the collector does not hold the lien, the next step is to identify the secured party shown on the UCC filing and obtain a signed termination from that party. If cooperation is not possible, a court order may be needed to clear the record before closing.

Talk to a Real Estate Attorney

If a home sale is at risk because a UCC lien tied to a solar loan cannot be terminated and the collector and original company are pointing at each other, a real estate attorney can help identify the secured party of record, demand the correct release documents, and coordinate a title-acceptable solution on a closing deadline. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Real Estate Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.