Taking a Security Interest in a Radio Station

You can be granted a security interest in the station's land, building equipment, records, CDs, etc. by your customer and perfect the security interest by following the provisions of the applicable state law. To the best of my knowledge, the license to broadcast which is issued by the Federal Communications Commission (FCC) is not transferable and a financial institution cannot perfect a security interest in the license, even if it is granted by the customer.

In the event your customer defaults on the loan, you can foreclose on the land, building, and equipment and sell it, but the buyer will be required to submit an application to the FCC and be granted a license before operating the station.

First published on BankersOnline.com 4/10/06