Staying Competitive in Today’s Factoring Market

We welcome Asonia Credit Data to our blog today to discuss ways to stay competitive in today’s factoring market.

The factoring market is expanding rapidly, with an almost daily addition of new players. This steady influx of entrants has created a more competitive factoring market, with lower rates and tighter margins. Today, you have to do more with less income just to stay in the game.

Lowering Costs Is Key in a Competitive Factoring Market

Finding ways to save is a necessity to remain competitive in an era of shrinking profit margins. One way to do so is taking a thorough look at your current service providers to ensure your hard-earned dollars are being spent in the most effective way possible. When you do, consider all of the following:

  • Weigh cost vs. value – If you’re paying for services you don’t need or don’t really use, you’re not getting good value. For example, paying for 15-page credit reports when only one or two pages contain relevant information that’s usable for making credit decisions doesn’t represent a fair return on your money.
  • Comparison shop – If you don’t take the time to compare service providers on a routine basis, you may be missing out on the latest advances in technology that can significantly reduce your overhead costs. Although it’s a time-consuming hassle to vet new providers, making those inquiries could pay off in big savings.
  • Escape your comfort zone – It’s easy to fall into a familiar, comfortable routine with your service provider, especially when they’re deeply rooted in your day-to-day processes. When you’re stuck in that mindset you may be missing out on myriad opportunities to increase efficiency. If another vendor can help you streamline essential processes, you’ll cut costs and increase your profitability by making a switch.
  • Consider industry insight – Think about whether your current service provider really understands the industry. If you’re dealing with a vendor who’s entrenched in the industry, you can access invaluable intelligence that would be otherwise unattainable. An industry-smart vendor can provide alerts that give you a heads up on the latest scams, fraud schemes, and pitfalls, and those timely warnings can reduce losses and protect your bottom line.
  • Factor in customer service – If no one returns your phone calls, or you can’t get timely answers to questions or adequate training for your staff with your present service provider, you’re wasting both time and money. Cutting costs doesn’t mean settling for mediocre service. Look for an affordable vendor who’s willing to go the extra mile, such as making a phone call to a data contributor on your behalf, answering questions so you don’t keep customers waiting, or offering critical insight when you need to make a credit decision.
  • Demand accuracy – Access to transparent, dependable intelligence and high quality data is an absolute necessity for your critical day-to-day decision making, so make sure what you’re paying for is reliable, fresh and accurate.  Factors should look for services that provide for a complement of the most advanced algorithms, technologies and manual updates to scrub and verify data not weekly, not once a day, but all of the time.

At Ansonia Credit Data, we’ve developed business credit reports and credit management tools that meld cutting-edge technology with current and accurate data.

To learn how our innovative offerings can boost your productivity in today’s competitive factoring market, please contact Tinamarie Sulpizio at tsulpizio@ansoniacreditdata.com and take advantage of a free 10 day trial of our innovative business credit reports by clicking here.

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Identifying Mechanic Liens for Liquor License Transfers: Why are they important?

When transferring a business with a liquor license there are a few considerations you need to be aware of in regards to lien searching. The California Alcoholic Beverage Control (ABC) can deny a liquor license transfer to a new applicant if all conditions are not met. This reality is why due diligence for liquor license transfers is so important when searching for liens against debtors, especially Mechanics Liens, even though Mechanics Liens may not always be present in State and County search results you order.

First, here’s a little background on the California Business and Professions Code (BPC). The BPC governs the transfer of all liquor licenses with or without a business. Many times the liquor license will transfer concurrently with the transfer of the business assets and the BPC usually will take precedence over the Uniform Commercial Code in these instances. The BPC lists Mechanics Liens in the fourth priority creditor position, while the UCC does not specifically list Mechanics Liens. The BPC takes priority over the UCC in this example. When using a pro rata distribution you must pay the creditors in a specific priority order from first to last. Failure to do so puts the liability on the escrow.
In that case, discovering the Mechanics Lien is crucial yet can be missed in a search. Mechanics Liens are filed at the county level, so if you (or your service provider) are conducting searches at the state level only you could be at risk of missing a Mechanics Lien. And as stated earlier, missing a lien could jeopardize the successful transfer of a liquor license.

First Corporate Solutions incorporates the requirements of the code into our search logic so there are no surprises when it comes to escrow transactions. For more information, check out additional reference materials here.

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How to Manage Your Growing UCC Portfolio?

Is your UCC portfolio growing? As it grows are your UCC management processes growing with it? Can your current solutions scale up to support your success?

These are questions and challenges successful lending institutions face as they grow and expand. Solutions that made sense before are perhaps no longer optimal. Maybe UCC filing directly with the Secretary of State made sense when your portfolio was in only one state, but managing accounts and filing idiosyncrasies as your footprint expands state by state? That can be tricky and time consuming and ultimately not necessary as numerous proprietary UCC portfolio managers on the market address these issues perfectly and are designed to simplify and accurately streamline your UCC processes. They are designed to give you tools to help manage your growth and scale up with you as you succeed.

Ever missed the window for filing a UCC3 Continuation, and thus lost your perfected security interest? Today’s state of the art web based UCC portfolio managers are designed specifically to assure that does not occur and provide features that allow quick and accurate UCC3 creation and submission, freeing you up to address other important items. Do you manage your UCC portfolio in a spreadsheet? Why not explore the option that brings all of that UCC data into one portfolio manager in which you can create, submit, warehouse and manage your entire UCC process.

As hard earned effort turns into success and you begin to experience the growth you set out to accomplish, processes and operations need to grow with you to support it all. Web-based UCC portfolio managers do just that and allow you to spend your valuable time and energy on other critical items in your decision making and lending processes. If the time is right for you and your firm, set up a demo and see for yourself how they can benefit you.

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County Filings Got You Down? An Experienced Service Provider Could Be The Solution.

This week we’re looking at a case study we recently encountered involving County Filings. It helps to demonstrate that even in today’s e-connected world there are still many instances for which there is no substitute for experience and the personal touch. Check it out below as told by Daniel Silverburg, our County Services Manager.

We received a request to file a UCC-1 in Riverside County, CA, and with Riverside County also being the debtor, by one of our corporate reseller clients. We always start by reviewing recordings for any obvious recording issues and in this case we found that the legal description attached to the UCC was not a clear copy and would likely be rejected.

We notified the client and they asked if the document needed legal descriptions or if addresses were sufficient. Since it is up to each county to decide what they consider a ‘sufficient’ description, I asked our searcher to show the UCC-1 to the recorder and ask if the document was acceptable with the attached legal description, and if not could we replace it with addresses and APNs instead. The recorder said that the legal description was not clear enough to record and that addresses and APNs would be acceptable. However, the supervisor that reviewed the UCC-1 said that the county would not accept a UCC with Riverside County as the debtor. The searcher asked the supervisor to explain why the document would not be accepted but did not receive a clear response, such as a statute or other reason the supervisor would not accept it. She just said no.

Once we received a clean copy of addresses & APNs to attach to the UCC, I then asked the searchers to show the document to the supervisor again and see if it would record. Once again the supervisor said she would not accept a UCC-1 with Riverside county showing as the debtor. I immediately called her while she still had the copy in hand to review with her.

I know from experience that UCC’s are often used in an attempt to cause fraud. These UCCs stand out because they are not worded like normal UCCs. For example they may reference the U.S. Constitution or list the property owner as both a debtor and secured party. I also see the long growing trend to have recording clerks be vigilant against fraud, and to be very aware of any suspicious looking documents.

Knowing that, and that there were no obvious legal reasons for the county to reject this document, I next Googled the debtor, the secured party and a few keywords in the collateral description and found a site saying that the county was leasing solar panels from Bank of America (the secured party) to be installed in 14 government centers throughout the county. Armed with that information, I called the recording supervisor back, who was holding a copy of the UCC and expecting my call, and I pointed out the collateral, the secured party and what I learned about the county leasing solar panels.

That did the trick.

Once the supervisor understood the purpose of why we were attempting to file a UCC with the county as a debtor she had no problem accepting it for recording. By understanding the specifics of the situation, and by reaching out with the personal touch, I managed to get it accepted in a two minute phone call.

*Disclaimer

Do You Know the New CFPB Regulations in California?

We welcome the California Escrow Association – Education Committee to our blog today with a discussion of the new CFPB regulations in California.

HUD announced in a bulletin dated August 26, 2014 (see link below), in response to new CFPB regulations, that the requirement for collection of “Post Pay-off Interest” on FHA loans has been removed. The change has recently become a topic of discussion because it applies to loans that are “closed” after January 21, 2015. Keep in mind the word “closed” does not mean the same thing to HUD as it does to those of us in the escrow/settlement world.

In a nutshell, the revision to interest collection applies only to loans that are originated (or “closed”) after January 21, 2015. If the loan being paid off originated (or “closed”) prior to January 21, 2015, it will be subject to interest collection for the entire month regardless of what time during the month the loan is paid off.

Bulletin link: http://portal.hud.gov/hudportal/documents/huddoc?id=SFH_FHA_INFO_14-50.pdf

Here are two examples that should help make sense of the new rule and how it will affect FHA payoffs in the future.

Scenario #1:
Borrower applies for an FHA mortgage and the loan originated in 2014. In 2015 the borrower applies for a refinance and intends to pay off the existing mortgage that was originated/closed in 2014. The existing FHA mortgage to be paid off will be subject to interest collection for the entire month regardless of what time during the month the payoff is being made. This is because the existing loan originated/closed before January 21st, 2015.

Scenario #2:
Borrower obtains an FHA mortgage and the loan is originated after January 21st, 2015. Several months after the loan was originated/closed, the borrower decides to refinance the mortgage to reduce the interest rate. Since the existing loan originated/closed after January 21st, 2015, the loan will not be subject to interest collection for the entire month.

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Upcoming Changes to Real Estate Settlement Statements for California Consumers

We welcome back our blog contributor PJ Garcia of Beach Escrow this week to discuss the upcoming changes to real estate settlement statements for California consumers this week.

Did you know that the HUD-1 Settlement Statement (HUD-1) is being retired?  The Legislature specifically directed the Consumer Financial Protection Bureau (CFPB) to integrate the disclosures required under the Truth in Lending (TILA) and Real Estate Settlement Procedures (RESPA) laws.  The final solution by the CFPB takes effect on August 1, 2015 and applies to almost all 1-4 Family Residential transactions involving a new loan.  Get familiar with the term TILA, RESPA Integrated Disclosure (TRID).

Effective for any loan originated after August 1, 2015:

The GFE and initial Truth in Lending disclosure (TIL) at application will be replaced by the Loan Estimate (LE).

  1. The HUD-1 and final TIL will be replaced by the Closing Disclosure (CD) which must be verified as delivered to the consumer (borrower) three days before loan documents can be signed. Seller will receive a separate Seller CD.
  2. The term for Buyer/Borrower is now “Consumer”. (Seller remains “Seller”)
  3. Tolerances have been narrowed and are now called “good faith variations”.
  4. CFPB fines and penalties for violations range from $5,000.00 to $1 million, per day.
  5. Lender is liable for variations in excess of allowable tolerances
  6. The escrow holder may, upon its agreement and at the request of the Lender, assist in completion and delivery of the CD.
  7. So far, Bank of American and Wells Fargo Bank have announced they will prepare and deliver the CD.
  8. MULTIPLE DATES TO WATCH:  “Consumer” must receive the final CD three business days before “consummation” which is likely to be interpreted as execution of the lender’s NOTE.  Lender may, if necessary, deliver to Consumer a Revised CD to reflect only specific changes such as per diem.
  9. Changes that exceed the narrow APR tolerances require a new CD and waiting period.

The devil is in the details! We learned in 2010 that implementation of something of this magnitude is a process.  Lenders, escrow and title companies are working to get the forms ready for use and to digest the changes to be ready for the 8/1/15 implementation date.

Understanding how these new regulations will affect the timing of closings is critical.  Please visit the links in this article to view the forms and other pertinent information.

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Should the Buyer and Seller take their business transfer through CA UCC Division 6, Bulk Sale Code?

On occasion questions come from the escrow community on certain situations that escrow agents find themselves in, involving the transfer of business assets and navigating through the CA UCC Code, under Division 6, Bulk Sale.

The questions come in various forms, typically involving a business asset sale and transfer through escrow.  The transactions can involve business assets only or business assets with a Liquor License, but the scenario is always similar to the situation below:

“My Seller/Landlord has taken over a laundromat business and all assets in his commercial building for non-payment of rent by business owner and has continued to operate the business for 6 months.  At the time of possession the Seller/Landlord did not process the transfer of assets through UCC Division 6, Bulk Sale Code.  My Seller and new Buyer have entered into a sale/purchase agreement and have opened escrow to complete the transfer of assets under UCC Division 6, Bulk Sale Code.  Should I as Escrow Agent be concerned about the previous Seller’s existing liens and conduct a UCC Lien Search as an added precaution for the Buyer?”

As a good business practice and procedure for your escrow or title company, in handling personal property escrows, industry professionals suggest that you should always error on the side of caution and be transparent with your Buyers and Sellers in explaining the potential liabilities and risks of not taking their sale through the requirements of a bulk sale escrow.  Granted there may be occasions where bulk sale escrow may not be necessary and the best advice is to always suggest that clients seek legal counsel if they have questions of a legal nature.

For purposes of this blog, there are some red flags that should trigger when you run into these types of escrow situations to protect yourself as the escrow agent:

  1. If your current Seller took possession of the business, its assets and maybe a liquor license, what process did they go through to obtain the assets and can they provide documentation that the assets are free and clear of all past Seller(s) debts?
  2. If the current Seller cannot provide proper documentation to show that all debt of their previous Sellers was cleared at the time of their possession of the business and its assets, there may be lingering liabilities out there that can affect your escrow transaction from a creditor company or taxing agency.

The escrow agent should conduct a thorough UCC and Tax Lien Search on all Sellers’ names of record for the past 3 years prior to possession by the current Seller to provide a level of comfort to your Buyer to potential liabilities and items to be cleared through your escrow.

Asking enough of the right questions will help determine for the escrow agent how they should proceed through the escrow to properly identify potential liabilities and ultimately protect the Buyer, and help clean up the business accounts of the Seller.

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Latest Court Decision Highlights the Value of UCC Lien Monitoring Service

CapitolThe US Court of Appeals for the Second Circuit issued a decision last week that may affect how secured parties authorize third parties to terminate financing statements after a mistakenly authorized UCC termination statement cost the secured party $1.5 billion.. Read the Reuters report here and click here to read the decision.

This decision underscores the value of UCC lien monitoring services: where secured parties can monitor their own UCC’s for unauthorized or accidental terminations. Also, secured parties should always ensure that UCC-3 Termination Amendments are included in their search results, and then contact the secured party(ies) of record to confirm the termination’s authenticity.

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Have You Secured Your Position?

Our guest contributor, Natalie Follmer of RMP Capital Corp, shares with us this week how to perfect a security interest and secure your position as a secured lender / factor.

In the funding world, UCC financing statements are essential in doing business.  They are a vital piece to the puzzle and can cause major problems if filed incorrectly.   When it comes to perfecting a financing statement, there are many items to consider and it’s important to know where to start.

First off, perform your due diligence.  It’s imperative to research any existing UCC’s and search results can present a wealth of information.  When reviewing the results, a few questions you may want to ask include: who are the secured parties, who has priority position, what is the collateral, are they still funding, will they terminate, and will they subordinate?  Performing your due diligence and addressing the secured parties early on can prevent unpleasant surprises down the road.

Now that you’ve done your research and have cleared the secured party list, it’s time to submit your UCC.   The first part of this step is to know what your company’s policies are and always consult an attorney prior to filing.  Once you are sure of the requirements, you can then perfect your UCC.  The key word here is “perfect”, which means correctly filing the financing statement.  An unperfected UCC is as good as not filing at all (gasp!).   Knowing the proper way to secure financing statements is the biggest hurdle to overcome and thankfully there are many resources available to guide us through the process; with various tutorials, webinars, filing services and state websites, learning the correct way to secure your position is as easy as 1-2-3.

The last piece is to perform an “after filing search”.  You never want to fund until you confirm your UCC is in place.  This search should show your UCC and any others that may have snuck in.  You want to ensure your position isn’t compromised, so any new UCC’s should be addressed accordingly.

When a funding relationship comes to a close, you may be requested to terminate your secured filing.  This process is easy, however for your funded and documented clients, you’ll want to obtain contractual general releases prior to terminating your UCC.  Again, always consult with an attorney and know what your company’s policies are prior to releasing.

While it seems the steps above are rather simple, they play a major role in the funding industry.  It is extremely important, and highly recommended, to obtain proper education on financing statements.   Learning the right way will save you time, energy and stress in the long run.

Natalie Follmer, RMP Capital Corp.

RMP Capital Corp is an international provider of factoring services for small to medium sized businesses in a wide range of industries, funding for independent factoring companies, and risk management solutions for contractors.  RMP Capital Corp Makes Funding Your Business Easier! Click here to learn more.

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[Special Offer] Free Virginia Online UCC Searches

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First Corporate Solutions is pleased to announce the addition of Virginia UCC data to our UCC library of states, available for searching Monday, January 26, 2015. Document images will be added soon to complement our Virginia solution and provide efficiency not accessible at the Virginia SOS itself; as you may already be aware, the Virginia SOS does not have document images online and they must be ordered separately. Until the images are included we will retrieve them for you upon request*. 

Enjoy consistent search logic, advanced search tools, comprehensive report options and a supporting portfolio which allows you to save search results and reports forever and later retrieve that information any time in the future at no further cost.

[Special February Promotion] All Virginia state searches you run on our online system through the end of February (2/28/2015) are free of charge. For existing clients, simply log in on Monday, January 26, 2015 to experience the benefits in action and take advantage of this opportunity.

Not an FCS online user? Schedule a demo of our UCC searching, filing and monitoring system today. Upon user registration, you will be able to search Virginia for free until 2/28/2015.

* Additional fees may apply

Lien Searching of Indexes with Mixed Lien Types — Why Uncovering Name Variations is the Key

One effect of Revised Article 9 and its implementation has been to better clarify and standardize naming conventions for entering debtor names onto a financing statement. These conventions are not only a guide to successful completion of the forms in order to perfect a security interest, but also to successful searching for financing statements in the indexes in which they are filed.

But what about searching indexes that include other lien types which are mixed in with financing statements, other lien types like Federal and State tax liens? How do Revised Article 9’s naming conventions affect the searching of those lien types?

A key issue to digest in answering that question is this: when filing tax liens, taxing agencies—including the IRS—are not held to the same naming standards that secured parties are held to with financing statements. The result is that debtor name variations on tax liens enter into and exist in the searchable indexes at these filing offices, and while an exact name search may not uncover their existence, their effectiveness nevertheless remains and the potential threat to a secured party’s perfected security interest from these Federal tax liens with debtor name variations is very real. Case law has been pretty clear about that.

So what does all of this mean for any searcher, like a secured party looking to qualify the credit worthiness of a potential new customer, who is searching indexes which include mixed lien types?

It means the need to uncover name variations in order to locate any and all potential liens, remains a very high priority to successfully completing a search in these indexes, no matter what Revised Article 9 clarified and standardized with regards to its naming conventions for financing statements. Tax liens are not governed by Revised Article 9’s naming conventions, but the need to locate them and uncover name variations to accomplish this has never been more important.

When searching, be sure to utilize a search engine which provides tools that assist in uncovering name variations. In many cases that means contracting with a professional search firm to either conduct the searches on your behalf or to provide a proprietary search engine so you can conduct the searches yourself—but with a search engine that actually helps you find the liens filed under some name variation.

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Three Actionable Things Lawyers Can Do To Polish Their Online Presence

This week have have a guest post from LawTrades.com, a service that helps place lawyers with those in need. They will discuss a few actions that lawyers can do to help market themselves online.


Three Actionable Things Lawyers Can Do To Polish Their Online Presence

Word of mouth is great, it’s been the primary avenue for lawyers to find new clients. However, an increasing amount of people aren’t resorting to a word of mouth referral to find a lawyer for them. If they are, it’s a very limited segment of people and it will continue to shrink. As much as lawyers hate to admit, people are beginning their lawyer searches online. Most professional service industries are already online like ZocDoc, which helps you find a doctor or Bench.co for finding a bookkeeper for your business.

In a highly digitized world, it’s essential for lawyers to maintain an online presence. Maintaining an online presence helps your practice stay relevant. Here are four actionable things that lawyers should do to help them become relevant online.

Revamp Your Website.

Having a professional website that looks sleek and has modern functionality is a huge way to distinguish your firm from the rest. Most solo practitioners and small law firms have a standard website with a bio, contact information and their practice areas. One thing that causes client backlash is accessibility, you can change this with a booking system on your website which allows clients to schedule a consultation with you. Also, consumers are always searching for reviews because reviews matter. Invest in a high quality template to make your website look modern. This can cost anywhere from $50-$100. If you have typical pricing that you charge for certain projects such as contract review, or forming a business make the process easy for your client to complete by letting them purchase that service online.  We can help you out with all of this at LawTrades.

Content Market the Right Way

Posting on a blog everyday might accomplish very little because you might not necessarily have a large following on your blog just yet. Although I think there’s a lot of value in posting valuable content on your blog everyday, if you’re looking to reach a large audience with your content, then consider posting on platforms such as Linkedin Pulse or Medium. These platforms have an inherent viral loop; a solid post on any of these platforms can reach thousands of users within a matter of days. The content has to be valuable and you should take an active role in promoting the content. You can always link back to your website as well. Spending time on a quality post can really go along way since the potential audience reach is very large. It takes a lot of time to put together quality posts, but you can’t expect content marketing to return an ROI overnight.

Story tell on social media

Any person that you would want to use your firm’s services probably visits Facebook, Twitter, Instagram, Pinterest multiple times per day. Do you have a presence on any of these platforms? If not, then you should start because this is a great way to start building your brand and engaging with new audiences that can use your services in the future. The biggest mistake that lawyers make on social media is that they fill their timelines with Tweets or Posts about free consultations. Lawyers are going for the “close” way to quickly and frequently without understanding the context of these platforms. That’s why lawyers look at these platforms as not being able to deliver a potential ROI. On these platforms, you have to bring real value, share interesting articles, quotes, pictures etc. By creating an audience that you can engage with about topics outside of the law, it will pay off in the long run when you attempt to go for the close in the future.

Although some attorneys are worried about the Internet draining money out of the legal industry, it’s important to note that lawyers can stay ahead of the game by becoming relevant online. It may take an hour or two out of the day but that’s what’s required to build an audience, provide value and then go for the close.


Law Trades | LawTrades.comashish@lawtrades.com

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Tired of reverse UCC searches exposing your customer list?

Have you noticed a wave of calls from your customers to renegotiate the terms of their security agreement? Does it strike you as odd that so many are calling you all at once?

Perhaps it’s not odd at all but instead an indication that a competitor has obtained a copy of your customer list and is reaching out directly to each and every one of your clients on it.

“No way!” you might say. “How did that happen?”

Well, it’s easier than you might think. Every time a secured party perfects a security interest by filing a financing statement, one result of that filing is to reveal a secured party’s debtor, its customer, in the public record. We all understand the reasoning behind this process and the intentions of the Uniform Commercial Code with regards to perfecting a security interest, and it has nothing to do with exposing a secured party’s customer list to its competitors!

However that’s exactly what occurs and how a specific use of the public record has evolved.

Just like one can search a Secretary of State index by debtor name to determine if a potential customer has any current obligations and how those obligations are collateralized, one can also search the SOS index by secured party.

And what does a secured party search reveal? It reveals the debtors of a secured party within the index searched—a secured party’s customer list.

If this is happening to your firm, perhaps it’s time to consider a Secured Party Representative service. This service allows secured parties to perfect their security interests as before BUT with one important difference: the secured party’s name is no longer listed on the financing statement. So, when a competitor runs a secured party search on your firm’s name, your customer list is protected.

Interested to learn more? Click here to see if you have a need for our secured party representative service.

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How to Handle Cancellation Instructions in California?

We welcome our blog contributor PJ Garcia of Beach Escrow this week to discuss her view on cancellation instructions this week.

Cancellation instructions are always a concerning and sometimes controversial area. In the November Residential Purchase Agreement (RPA) revision, California Association of Realtors (CAR) included some language that provides for unilateral cancellation of a sort which presents one of those controversies. Upon review of this language, the Escrow Attorneys and veteran Escrow Officers I have spoken to so far are effectively saying “Danger Will Robinson”! (and now I have dated myself).

There are many considerations for escrow agents in handling cancellation instructions. How individual companies decide to handle that remains to be seen, so I recommend checking with your escrow officer before advising your clients they can cancel unilaterally.

To cancel without a mutual cancellation instruction would require assessments and determinations on the part of the escrow agent that are really outside the scope of our role as a neutral fiduciary. These include consideration of the impact of forfeiture statues governing the liquidated damages clause. Please note that the liquidated damages paragraph is not listed in the Joint Escrow Instructions to Escrow Holder. Additionally, the Cancellation language in Paragraph 14G uses the term “notice”, but does not provide a process for that notice. Unlike Liquidated Damages, 14G does not require a specific acknowledgment, enhancing the “I didn’t see it” argument.

For your further information, here is an article on the subject of Liquidated Damages from the publication California Lawyer.

Contributor: PJ Garcia, Beach Pacific Escrow

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Drawbacks of a Certified UCC Search – FCS Greatest Hits #6

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The final installment in our Greatest Hits blog series covers state certified UCC searches, aka UCC11s. There are times when you might want to request a certified search, they do serve a purpose. But, because of their oftentimes narrow search logics which can inhibit a searchers ability to uncover name variations, thorough due diligence typically requires utilizing a broad-based search solution that is designed to uncover and include similar names in its search results, especially when searching indexes that include mixed lien types.


Drawbacks of a Certified Search

Locating Tax Liens

The first potential problem with a certified UCC search relates to locating tax liens. Many state filing offices administer tax lien records in addition to UCC’s. In some states, tax lien records are maintained on a separate index from UCC’s, while in other states the UCC and tax lien records are housed on a single searchable index. The single-index arrangement can cause problems for searchers.

The Uniform Commercial Code does not govern tax liens. While a UCC filer must list the exact legal name of their debtor in order to ensure the effectiveness of their filing, there is no such requirement for a government agency filing a notice of tax lien. Since a tax lien filer is not held to the same naming standard as a secured party filing a UCC Financing Statement, an active tax lien may not show up on a certified search using exact name search logic.

Exact Name Search Logic Increases Search Costs

Another drawback of a certified search is price. Most state filing offices charge between 15-25 dollars for a certified search. Sounds reasonable, right? Not so fast, keep in mind that a certified search will most likely not include any similar names. Due to the restrictive search logic used to generate a certified listing, you may have to order a separate certified search for each name variation you can think of and those fees can add up rather quickly. Exact name search logic, as used by state filing offices, increases your overall search costs.

Turn Around Time

Lastly, the turn-around time for a certified search can be slow. It is not uncommon for a state to take 5-7 business days to return a certified listing and for many lenders who are using UCC search information to help make an informed funding decision, that’s just too long to wait.

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Maximize UCC and Lien Search Results to Minimize Risk – FCS Greatest Hits #5

FCS Greatest Hits 6As we continue the FCS Greatest Hits blog series, we want to zero in on a specific benefit resulting from conducting UCC searches with enhanced search logic (i.e., not strict  or certified searches) through a proprietary UCC search system—finding name variations. Learn how to cast a wide net and then whittle your search down to only the relevant results.


Maximize UCC and Lien Search Results to Minimize Risk

When conducting UCC and lien searches as part of a prefunding due diligence investigation it is a good idea to maximize your results in order to minimize your risk. This strategy helps uncover hidden liens and those filed under critical name variations. To accomplish this, you will want to cast a wide net to bring in as many potential hits as possible and then whittle them down to only those that are pertinent to your transaction.

Online Searches

Online search systems are a great tool for maximizing results. Proprietary search systems and even some state websites incorporate broad based searching features such as wildcard characters and truncated name searching that help reveal name variations. By using these features, searchers can draw like names onto a single search report, for a single fee, and then review them in more detail to determine if they are items of interest.

See our previous blog post “Broad Based Name Searching? What is it? Why is it Important?? for more information on the power of broad based name searching.

Manual/Offline Searches

Not all searches can be performed online; sometimes you will need to place your search request with a private service company who has access to the filing office records. Although the search is out of your hands in these situations, there are still ways you can maximize your results. One of the best ways to do this is to thoroughly vet your provider before placing your request. Some service companies focus on name variations and maximizing results while others do not make this a priority. Make sure you communicate to your vendor that you are looking for similar names to be included in results.

Lastly, when ordering searches from a search company, be mindful of what special search instructions you include with your request. Asking a service company to limit results to a certain address, for example, will limit the scope of the results that they return to you.

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Benefits of a Proprietary UCC Database Search System – FCS Greatest Hits #4

FCS Greatest Hits 4The FCS Greatest Hits blog series continues today with more details on the features and benefits of searching with a proprietary UCC search system. And if you’re looking to see an online UCC search system in action, don’t hesitate to contact us for a free demonstration.


Benefits of a Proprietary UCC Database Search System

Let’s take a look at the benefits of using a proprietary database to perform state UCC searches.

What is a Proprietary Database Search?

A proprietary database is a UCC search system that is owned and operated by a private service company; it is not affiliated with any state agency. A proprietary search system is created when a service company purchases UCC data in bulk, then builds an interface where users can perform password protected online UCC searches.

Broad-Based Name Searching

One of the primary benefits of using a proprietary search system is the broad-based name searching capabilities. Search systems that use broad-based name searching offer flexible search logic by incorporating special features such as wildcard characters, truncated name searching and fuzzy word searching. These features are designed to produce a more inclusive search result to help searchers identify similar names and locate critical filings that might be missed using exact name search methodology.

Online Image Library

Another advantage of using a private search system is the availability of document images. Proprietary search systems typically have an expansive library of document images that users can download instantly while conducting their search. While a search report can show you party names, addresses and maybe even collateral type, it is usually necessary to view an image of the filed document to see what a given financing statement specifically secures. A database that does not offer online images is providing only a piece of the puzzle.

Consistency

Lastly, using a proprietary search system brings consistency to a user’s searching practices. For searchers using numerous state direct online databases, it can be cumbersome to maintain separate accounts and log in credentials for the different systems for each. Furthermore, keeping track of the various systems’ search logic parameters and learning to interpret search results in a variety of different formats can be confusing. Those using a private search system to satisfy their UCC search requirements enjoy consistent search logic, easy-to-read results and a support staff to provide training and ongoing support.

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What is “Standard Search Logic” and what are the Model Administrative Rules? – FCS Greatest Hits #3

We would be remiss in our duties of posting our Greatest Hits of UCC searching without mentioning some of the great things the folks at IACA are doing to standardize the application of the Uniform Commercial Code.


What is “Standard Search Logic” and what are the Model Administrative Rules?

The amount of liens filed in a given state’s filing office can number in the millions making accuracy, and the ability to uncover name variations,  paramount when analyzing search results. Each individual Secretary of State filing office has a set of rules called “standard search logic” that determines what search results will show for a given search. Here’s the official definition:

Standard Search Logic: The search logic used by a filing office to determine which filings will appear on an official UCC search of that jurisdiction.

iacaThe Model Administrative Rules (MARS) were developed by the International Association of Commercial Administrators (IACA) to standardize search logic for all state filing offices, which was one of the goals of Revised Article 9. Adoption of these rules is, unfortunately, not mandatory, but MARS are still important because they set the framework for standard search logic. Standard search logic sets rules for how words, abbreviations and symbols will be interpreted and delivered as search results by a search engine.

Here are a few examples of MARS search logic:

  • Spaces and punctuation are disregarded
  • “&”equates to “and”
  • No distinction between upper and lower case letters
  • Words and abbreviations at the end of an organization name that indicate the existence or nature of the organization (“noise words”) such as inc, llc, association, incorporated etc. are disregarded (but note that MARS leaves it to the states to determine what constitutes these “noise words”). Most if not all states recognize the following as “noise words”: Corp., Corporation, Incorporated, Inc., Limited Liability Company, L.L.C., Limited Partnership, L.P .

Keeping track of each state’s standard search logic can be a chore, and many people choose to use a UCC service provider to ensure they’re getting the most out of their search results. The FCS online UCC search system has the broad-based search tools (like wild cards and truncated search) you need to uncover name variations and assure you’re getting the results you need.

[Image Source: Official IACA Logo]

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Understanding the Limitations of State Direct UCC Online Searches & New Alternative Solution – FCS Greatest Hits #2

FCS Greatest Hits 2We continue our Greatest Hits blog post series this week with “Understanding the Limitations of State Direct UCC Online Searches & New Alternative Solution,” where we explain some of the drawbacks of using the state-provided UCC searching resources.


Understanding the Limitations of State Direct UCC Online Searches & New Alternative Solution

In addition to the broad-based name searching capabilities and reliable state-direct data we provide, our system features an expansive library of document images in PDF format, lifetime search history, real-time reporting of costs, and the ability to export search results into an Excel spreadsheet. The system also features a UCC filing and portfolio management portal that enables users to prepare, file and track their UCC transactions from one central, secured online location.

A growing number of state filing offices are offering UCC search databases at low to no cost via their websites. In an effort to keep due diligence costs low, many searchers are turning to state direct online databases to fulfill their UCC search requirements.

It’s easy to understand the appeal of these state direct databases – free searches: sounds great, right? When examined closely however, many of these state sites have limited utility due to some serious system limitations.

Here are a few questions to ask when evaluating if a particular state direct search site is the right choice for your firm:

What Lien Types are available on the Index?
Numerous states maintain Tax Lien records (Federal and/or State) in addition to UCC data. However, these lien types may or may not be available to the searching public via the state’s online database. Some states even have a separate online index that requires a second search to locate Tax Liens. To avoid any surprise liens, remember to research what lien types will be included in your results when using a state direct database.

Does the state direct database provide an index date?
Many states that offer an online UCC index do not publish their index date (aka through date) on the website to inform searchers of how current the online data is. Outdated lien information can impede a searcher’s ability to determine current filing status, accurate party names and priority of claims.

Are document images available online?
While a search report can deliver several pieces of critical information, it is usually necessary to view an image of the filed document to see what collateral a given Financing Statement covers. State direct databases that do not offer images online are only providing a piece of the puzzle.

What is the Search Logic?
Before using any state direct online search system, it is essential to have an in depth understanding of the type of search logic it employs. For example, does the state site allow for the entry of truncated search strings? Does the system report similar names? These features allow searchers to reveal name variations and uncover filings that may have been mis-indexed.

Keeping track of the ins and outs of the various state direct search sites can be a daunting task. Try using a proprietary search system to streamline your search process. Privately maintained and operated, these systems offer consistent search logic, easy to read results and a support staff to provide training and ongoing support.

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