If you are an attorney responsible for protecting an institution that provides financing for any type of energy-related project — such as solar farms or wind turbines — you should consider the benefits of a UCC insurance policy.
A UCC insurance policy provides title insurance coverage on the considerable personal property pledged to a project finance lender in energy transactions.
In addition to the real estate title insurance policy that will be obtained on the underlying real property and improvements:
- A UCC insurance policy will cover the turbines, generators, solar panels, power purchase agreements, income stream accounts, licenses and pledges of a borrower’s ownership interest in an energy project.
- The insured project finance lender will obtain a title insurance policy of indemnity on personal property collateral as is obtained for the real property collateral.
- Note that the American Land Title Association Energy Endorsements do not provide any title insurance coverage for the proper attachment, perfection or priority of an insured lender’s liens in the personal property collateral.
- If not documented and perfected absolutely right, the project finance lender risks a challenge in bankruptcy by the debtor in possession or the unsecured creditor’s committee.
- Experienced UCC underwriters can offer a “second set of eyes” on a secured transaction.
- If representing the borrower in a project finance transaction, a UCC insurance policy can reduce your firm’s exposure to legal opinion liability.
- You can take advantage of the financial strength of a Fortune 500 provider of title insurance, rather than relying on litigation with the borrower’s counsel to settle claims related to proper attachment, perfection and priority.
About the Author
Gary M. Zimmerman is Senior Vice President and Chief Underwriting Counsel for UCCPlus, a division of Fidelity National Title Group.