Is filing a commercial lien a good way to enforce rights?

What are commercial liens?

The term "commercial lien", or just "lien", loosely refers to the filing of a UCC-1 financing statement under the laws of UCC Article 9 in a state registry as notice of an interest in some collateral. You might be familiar with such liens if you've ever financed a car or other property. The financing statement lists the name of the secured party and debtor and includes a description of the collateral, or simply refers to an object directly by serial number or other identifier, such as the Vehicle Identification Number found on most automobiles.

The filing of the financing statement does not, by itself, establish a valid, enforceable lien, but is merely a reference that indicates there might be a possible valid lien. The actual legal right to enforce a lien arises from a contract called a security agreement between the secured party and the debtor. A security agreement must be consensual, in writing, the collateral should be listed, the intent of the debtor to grant a security interest should be clear, and it must be signed by the debtor pursuant to the statute of frauds established by UCC 9-203(b)(3)(A) and the definition of "authenticate" in 9-102(a)(7).

Popularity with sovereign citizens

Once filed, whether there's a valid security agreement behind it or not, a financing statement serves as a warning to the public and potential creditors that there may be money or property owed by a debtor. This is likely to seriously affect the debtor's ability to obtain credit, especially when it appears a significant value is owed.

Unfortunately, in the interest of expedient commerce, the process is open to abuse. The legitimacy of a security agreement is not verified by state UCC offices before a financing statement is allowed to be filed. As a result, these instruments have become popular with sovereign-citizen types who use them to try to get revenge or obtain compensation for perceived trespasses against them.

The typical abusive process

To lend legitimacy, the would-be sovereign typically sends a series of letters by certified or registered mail outlining the perceived breach of their rights and giving the target an opportunity to pay an arbitrary amount as compensation. They might do something like this, for example:

  • Notice of fault
  • Second notice
  • Default
  • Invoice
  • Lien (Financing Statement)

Paper terrorism

Abusing UCC-1 financing statements is often labeled paper terrorism. As we've covered, it's a relatively easy way to cause significant frustration and harm to a party. To remove a false filing the debtor must bring a lawsuit against the secured party claiming there is no valid security agreement. Once the court sees the debtor did not explicitly grant a security interest in writing the court will order that the financing statement be discharged, and may further order costs and damages be paid to the victim. While straightforward, this is not always easy to accomplish as it can require significant expense and time to achieve. Furthermore, many people who abuse the system do so because they are broke, desperate and have nothing to lose, so it may not be possible to actually collect on any award for costs or damages.

Laws against false liens, and punishments

Georgia was one of the first states to enact a law to combat the scourge of false liens with a statute that mandated 1 to 10 years in jail and up to a $10,000 fine for each false lien against a public official. This was later extended to all persons. Various other states have laws to help combat fraudulent liens. Federal laws are also available, such as 18 USC § 1521 and 18 USC § 287.

A number of people have been criminally charged and sentenced for filing false liens:

  • Cherron Marie Phillips – 7 years jail (Memorandum)
  • Tyrone Eugene Jordan – 10 years jail (Docket)
  • Donna M. Kozak – 3 years jail (Judgment)
  • Randall David Due – 10 years jail (Judgment)
  • David Carroll Stephenson – 10 years jail (Judgment)
  • … and many more


Playing with commercial liens can have serious consequences. Unless you know what you're doing and have a legitimate security agreement signed by the debtor you should avoid filing UCC-1 financing statements.

What do you think?

  • Alex R.K.

    Those Sovereign Citizens have it all wrong about the UCC. They think that it's a replacement of the Constitution that, along with the abandonment of the gold standard, turned the U.S. into a corporate-owned nation where the people are "enslaved" through anything that those Sovereign bozos believe would entail an implicit contract, such as birth certificates, vehicle registrations, insurance cards, those kinds of things.

    Fact is, the UCC is a subset of law relating to commerce, and is COMPLETELY uninvolved with civil or criminal law against individuals.

    Now, I never registered to be a voter, because one may never know who's honest or who's an ambitious and corrupt scumbag. Now, I may not have much faith in the U.S. government at large, but it's no reason for me to buy into any of the BS that the self-proclaimed legal "gurus" propagate throughout the Internet.

  • WDE

    stop trying to scare people from using liens.. they are a legitimate tool when you are owed something.


      The correct way to enforce a bill, contract, etc. is to file a lawsuit, get a judgment, and use court orders to seize income and assets. Liens are typically for collateralized obligations and, as stated in the article, require a security agreement (contract) signed by the debtor. Seizing an alleged debtor's property without a court order or valid security agreement is contrary to law. What makes you think otherwise?

      • Alex R.K.

        @pseudolaw:disqus Hopefully, this chap isn't a sovereign citizen like certain other people on the internet that commented here on your site to try and discredit you.

  • AC Slater

    I read that you can legally remove a lien though by 1.) most obvious paying it off but also 2.) requesting that your lender files a UCC-3. How effective is this typically? Source:


      Read carefully.. the lender can be asked to file a UCC-3 to remove the lien after it's paid. This has nothing to do with the paper terrorism mentioned in the article, and you can't use it to get out of a legitimate security agreement and lien without paying (unless the lender happens to voluntarily forgive the debt).

  • Prisoner 335

    The contract is the Constitution. The signature is on the oath justice department employees take.


      The Constitution says the courts are in charge of interpreting the law, so why inject your own theories instead of asking the court to do its job and respecting its authority? If you want the law to change you need to influence the people in your city, county, state, country to participate in public polling, etc. to influence your representatives in the legislature(s).

  • Prisoner 335

    The state uses misapplication of the law as standard procedure. If a citizen tries it they are treated as fools and deadbeats.


      If anyone misapplies the law there can be consequences. The courts, pursuant to the state or federal constitution, are in charge of interpreting the law, though, not individuals.