What is the effect of a properly filed UCC-1 financing statement on public notice and lien priority?

• A. It provides notice to third parties but does not affect priority.
• B. It guarantees priority over all other liens.
• C. It creates a lien on real property.
• D. It publicly records and perfects the secured party's lien, providing notice to third parties and establishing priority.

Answer: (D)

Filing a UCC-1 financing statement provides public notice and perfects a security interest in the debtor’s personal property. When it’s filed, it signals to third parties that a secured party has an interest in the collateral, which helps establish clear knowledge of the claim. More importantly, the act of perfection—achieved by timely filing—publicly records the lien and gives it priority against other creditors who may have claims to the same collateral. Priority among perfected interests generally follows the timing of perfection, so earlier filings (or earlier perfection by other methods) typically outrank later ones, with some exceptions like purchase money security interests. The UCC-1 does not create a lien on real property, and it does not guarantee priority over every other lien, but it does both publicly record the secured party’s interest and establish its priority relative to other perfected claims.