At a Glance
- Equipment mobility across state and international borders creates enforcement gaps that most security agreements fail to address until recovery is already compromised
- A Secured Research analysis of 260 equipment recovery actions found that 31% involved collateral located in a different jurisdiction than where the original UCC filing was perfected
- Cross-border enforcement for Canadian and Mexican equipment requires advance structural planning that cannot be retrofitted after default
- The lenders with the strongest recovery rates build jurisdictional flexibility into their documentation at origination, not at workout
The Problem Nobody Thinks About at Closing
A $2.8 million construction crane financed in Texas is working a job site in Alberta. A fleet of CNC machines leased to a Michigan manufacturer is relocated to a maquiladora in Nuevo León after a supply chain restructuring. A medical imaging system pledged to a Georgia-based borrower ends up in a Florida subsidiary that was not party to the original transaction.
In each of these scenarios, the lender’s security interest—perfected correctly in the original jurisdiction—may be impaired, subordinated, or unenforceable in the jurisdiction where the equipment now sits. The UCC filing that protects the lender in Texas provides no protection in Alberta. The security agreement governed by Michigan law may not be recognized by a Mexican court without additional steps that were never taken.
