First Corporate Solutions Blog | UCC, Corporate, Lien, Litigation, Title | Search, Filing, Monitoring » Corporate Related Topics

Tips for Reducing UCC and Lien Search Costs

First Corporate Solutions Team — Fri, 16 Dec 2011 21:12:01 +0000

As the 2011 nears its end, First Corporate Solutions recognizes that many of you are evaluating your expenses and looking for ways to reduce due diligence costs in the upcoming year. To lend a hand, we offer the following suggestions for decreasing your costs for lien searches – without jeopardizing priority or increasing your risk.

Don’t Over-Search

One of the simplest ways to keep lien searching costs down is to be careful not to over-search. Note, First Corporate Solutions is not suggesting that you eliminate critical searches from your prefunding routine. What we mean is, be mindful to limit the searches you perform to only those that are necessary in order to evaluate risk and determine position.

Many times people are unsure about what to order and they are nervous about missing a lien, so they place a service request for EveryTHING EveryWHERE. To keep searching costs to a minimum, make sure that you are searching the right names, for the correct liens in the appropriate filing office.

Self-Search

To drive down costs, try working with a UCC provider that offers a web-based search system. The fees for self-searching on a private online search system are often much lower than those incurred for a manual search of the same records. As an added benefit, many online search systems offer broad-based searching features such as wildcard characters or truncated search logic to help reveal name variations. Broad-based name searching helps reduce search costs by enabling searchers to combine similar names onto a single search report rather than paying separately for each.

Watch Copy Costs

Most public record search companies charge a per page fee for copies of lien documents that accompany your search report. Active names can generate hundreds of dollars in copies that may not even be relevant to your deal. In cases where your search name is common or you anticipate a large number of hits, you may want to order a “listing only” search to start. Then you can review the report and order copies of only those documents that are pertinent to your transaction.

For more tips on reducing copy costs for your lien searches, refer to our blog post, “Keeping Copy Costs Down for Your UCC & Lien Searches.”

Check back next week for our blog post on cost saving strategies for UCC filings!

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Refer to Organizing Paperwork for Legal Name of a Business Debtor

First Corporate Solutions Team — Mon, 12 Sep 2011 18:15:21 +0000

According to the Uniform Commercial Code, a UCC Financing Statement is only effective if it gets the debtor name right. A UCC Financing Statement that fails to properly identify the debtor by their legal name will not offer the secured party priority status to collect should the debtor default or file for bankruptcy.

The Code goes on to say that for registered business debtors, the name that should appear on a UCC Financing Statement is the name that appears in the public record in the state where the business is organized. The prevailing opinion among UCC scholars is that, in this context, “public record” means a business’s formal organizing paperwork such as articles of incorporation/organization or partnership agreement.

These days, states filing offices and many private service companies, are making business entity data available online. As a result, a trend has emerged where we find UCC filers looking to an online business entity database to determine an entity’s legal name. Here on the First Corporate Solutions Blog, we want to take a quick moment to emphasize that it really is best practice to view the actual, organic formation documents (including any related amendments or mergers), rather than relying on an online database to determine the legal name of a business debtor.

On the surface, an online business entity database may seem like a low cost alternative to obtaining copies of formation documents, but in fact, trusting online business data can pose a real threat to a secured party’s perfection. In an online database, words may have been abbreviated or typographical errors committed that would cause a secured party to put the wrong name on their UCC Financing Statement, setting them up for a potential future loss should the secured party ever have to fend off a challenge from a competing creditor.

In many cases, you can get a copy of a company’s organizing paperwork from your applicant, but for those times when they need to order copies of a company’s formation documents, First Corporate Solutions offers affordable, nationwide retrieval of business documents. Contact us today to place your order at 800.406.1577 or info@ficoso.com.

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Costs for Performing a UCC, Lien, Litigation or Bankruptcy Search

First Corporate Solutions Team — Tue, 23 Aug 2011 01:16:53 +0000

One of the most common areas of confusion relating to public records searching has to do with the costs incurred for search requests, particularly those requests that a customer places with a private service company. The fees associated with this type of research are varied and an invoice may use terminology that is unfamiliar to those with infrequent searching needs. Herein, we offer some guidelines for what types of fees you can expect when placing a service request with a service company.

Service Fees

Due diligence service companies are for-profit businesses who employ public records experts to assist you in navigating the complex world of public records. When you utilize a service company to fulfill your search request, there will be a charge for their services. Typically, a service company will charge for their services on a per name, per jurisdiction basis. This means that every individual service they perform will carry a separate charge.

Correspondent or Vendor Charges

With 50 states, plus Washington D.C. and over 3000 counties in the United States, no service company can physically visit every filing office in the country to perform your service request personally. In areas where a service provider doesn’t have a physical presence, they will enlist a local vendor to complete your service request. The local vendor will charge for their services, and your service provider will pass those fees along to you as a correspondent or vendor charge.

Jurisdictional or Statutory Fees

Public records must be available to the general populace, but there is no rule that states the records must be available free of charge. In some cases, a service company may need to advance funds on your behalf to the filing office where the search is performed; a certified search is a good example of this type of occasion. A jurisdictional fee, sometimes referred to as a statutory fee, is an out of pocket expense that your service provider has already paid directly to a filing office in order to complete your service request, and is an example of another pass along fee you may incur.

Copy Costs

A search company’s service fee is the cost for them to complete the required research and generate a report of their findings. If you need to view copies of the items that the search effort uncovered, your service provider will need to obtain copies and you can expect to incur a copy cost. Most service companies charge for copies on a per page basis; be mindful that copy costs can add up quickly.

First Corporate Solutions offers competitive pricing and no hidden fees. Contact us today for a free consultation! 800.406.1577 | info@ficoso.com

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Bad Corporate Standing: What is it? How do I fix it?

First Corporate Solutions Team — Fri, 15 Jul 2011 23:48:44 +0000

There are countless occasions in which a person could be asked to supply a certificate of good standing for their business, or where a lender or attorney acts to obtain one. Two of the most common scenarios are to register or qualify a company to transact business in another state, and to open a business banking account.

A good standing certificate verifies that an entity is authorized to transact business in a given jurisdiction and certifies that they have satisfied the requirements imposed by that state. Sometimes though, the certificate is returned from the state indicating an unfavorable status. In these cases, the document might say the entity is “not in good standing,” “forfeited” or “suspended.”

What Went Wrong?

As mentioned above, in order to maintain good standing, a business entity must satisfy a set of statutory requirements. These requirements will vary state to state, but typically involve the filing of requisite statements and payment of an annual fee or tax. An entity that is in bad standing has failed to comply with one or more of these requirements.

Does Bad Standing Really Matter?

People form Corporations, Limited Partnerships, Limited Liability Companies, etc. in order to gain certain legal and tax benefits. Companies that enter bad standing and do not promptly rectify the situation are in danger of being administratively dissolved or revoked by the state. If that should happen, the business and associated parties will lose the protections of being a registered entity.

How do I Fix It?

First, you will need to find out the reason for loss of good standing. You can either call the state filing office directly or work with a private service company to help you determine the cause. Once you know what deficiencies exist, you can begin the process of reinstatement (return to good standing). In order to reinstate, an entity must file all required statements and disclosures, and taxes and fees must be paid along with any penalty charges incurred for late payment. Once all outstanding requirements have been satisfied, the entity will regain favorable status and a good standing certificate can be obtained.

First Corporate Solutions can help you restore your entity to good standing quickly and affordably. Our staff of corporate experts has the tools and the know-how to expedite reinstatement of your business entity.

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Additional Resources for Information on UCC & Corporate Due Diligence

First Corporate Solutions Team — Fri, 08 Jul 2011 16:51:20 +0000

We try to cover a wide range of topics on the First Corporate Solutions blog. Our approach is to identify the questions we hear customers and prospects pose most frequently and address those areas of confusion proactively on the blog. This week we respond by sharing some additional information and resource outlets regarding UCC & corporate due diligence.

State and County Websites

When you need to perform a search or submit a filing at a particular filing office, it is a good idea to review their website before initiating your task. In addition to general information such as fees for services and forms, many filing office websites offer a frequently asked questions section, filing tips and links to other reliable resources within that jurisdiction

For example, if you are looking for information on forming a corporation in the state of California. You could visit their website. On this page, the Secretary of State provides forms with instructions and samples, filing tips, processing times and links to other organizations you may need to work with in order to establish a legally compliant business.

Professional Associations and Trade Journals

If you work in an industry that interacts with public records and you belong to a professional association, you may want to spend some time investigating what resources they offer. Professional Associations can be a particularly valuable source of information on UCC and corporate due diligence since their materials relate specifically to your type of business. Most associations provide extensive online resources including web-based tools, training materials and lectures or webinar events. In addition to online resources, your association’s trade journal is a great place to find in depth discussions on critical issues written by experts in your field.

Service Companies

Private service companies can be an excellent source of information on due diligence related tasks. Customer service representatives for private service companies are extremely knowledgeable about best practices for completing search and filing tasks and are well versed in specific jurisdictional requirements. They are usually happy to spend a few moments on the phone with you to help you get on the right track.

First Corporate Solutions offers a variety of educational resources on our website. Visit our Knowledge Center online to explore our full library of educational resources.

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How Will The Potential State Shutdown in Minnesota Affect Your UCC & Corporate Transactions?

First Corporate Solutions Team — Fri, 24 Jun 2011 22:39:30 +0000

Across the nation, state and county-level governments face overwhelming budget shortfalls, dramatically impacting their ability to deliver public services. We learned this week that things are particularly bad in the state of Minnesota.

Due to a statewide budget crisis, the Minnesota Secretary of State’s office is facing a potential closure. The Minnesota State Legislature adjourned last month without appropriating money to fund state government operations for the fiscal year that begins on July 1, 2011. The Secretary of State’s office will be unable to provide public services without these funds. Minnesota and county recorders and courts are also at risk.

Read the Secretary of State’s press release here

The Attorney General has intervened, seeking a court order that would allow essential government functions to continue, including the services provided by the Secretary of State’s office. It is unknown at this time whether a decision can be reached before June 30, 2011 in order to avoid disruption of services.

In the event of a Secretary of State shutdown:

§ No UCC Financing Statements or Amendments will be filed

§ No UCC and Lien searches will be performed

§ No new business entities can be formed

§ No copies of corporate records can be made or certificates issued

§ No apostilles or authentications will be applied to documents

§ No substituted service of process will be available

If you have any upcoming deals in Minnesota, we encourage you to submit your search and filing requests as soon as possible to avoid any negative consequences of the potential shutdown.

In the event of a Secretary of State shutdown, First Corporate Solutions will still be able to provide UCC and Lien searches; however please note the index date will not advance until the state reopens for business.

Please feel free to contact us at 800.406.1577 | info@ficoso.com with any questions or to initiate an expedited Minnesota service request.

[Update: 6/30/2011]

It is unknown at this time whether lawmakers can reach an agreement before close of business on June 30, 2011 in order to avoid disruption of services. We encourage you to submit your search and filing requests as soon as possible to avoid any negative consequences of the potential shutdown. The Secretary of State’s office will remain open until 8:00pm CDT today to assist customers in completing their critical transactions.

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Jurisdictional Updates Regarding UCC and Corporate Services

First Corporate Solutions Team — Wed, 25 May 2011 20:41:09 +0000

This week on the blog we share some important news from state filing offices. Please note the following issues may impact your ability to file and retrieve UCC and Corporate documents.

Kentucky
Kentucky state offices will take the final mandatory furlough day for this fiscal year on Friday, May 27. All Kentucky state offices will be closed for business on this date. Online services will remain available during the office closures.

South Carolina
South Carolina Secretary of State (SC SOS) recently implemented a new UCC system. In the new system, a UCC Financing Statement that has not been continued will lapse as of 12:01am on the 5th anniversary of the initial filing date. This means, a UCC filer who waits until the last day to continue their UCC filing will have their Continuation Statement refused by the SC SOS.

Vermont
The Vermont Secretary of State is moving to a new building June 3 and 4. Their new address will be: 128 State Street, Montpelier VT 05609-1104. The move will affect the following divisions: Corporations, UCC, Elections, and the Office of Professional Regulation. Phone service to these divisions may be interrupted during the move.

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Top 5 Misconceptions About UCC & Corporate Due Diligence Series # 5: Omit “dba” notation from UCC Filings

First Corporate Solutions Team — Sat, 14 May 2011 03:58:27 +0000

A UCC Financing Statement must properly identify the debtor in order for the UCC to perfect a security interest and provide priority protection for the secured party. To satisfy this requirement, a secured party must complete their Financing Statement using the debtor’s legal name.

In general, secured parties understand the importance of properly naming the debtor on their UCC Financing Statements and try hard to comply. Sometimes though, they try a little too hard and include additional information, such as “dba” names (ex. ABC Trucking, Inc. dba Truck World) in an attempt to more clearly identify their debtor.

By structuring their debtor names to include a trade name, secured parties are actually failing to file under the entities legal name. Every entity has a single legal name, which is the name listed on their organizing paperwork (articles of Incorporation/Organization etc.) A trade name is merely another name under which the entity may do business, sort of like a business alias.

Under the Uniform Commercial Code, filing under a trade name alone is not sufficient to perfect a security interest; a UCC Financing Statement must list the legal name. A secured party is free to file under the legal name and the trade name, if they wish. A better way to file in these cases is to list the entity’s legal name as the primary debtor and list the trade name as an additional debtor, omitting the “dba” notation from the beginning of the name (ex. Debtor 1: ABC Trucking, Inc., Debtor 2: Truck World)

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Top 5 Misconceptions About UCC & Corporate Due Diligence Series #4: Service Companies Often Cannot Provide Same Day Service For Corporate Documents

First Corporate Solutions Team — Tue, 03 May 2011 17:29:29 +0000

Due diligence service providers often field phone calls from frantic customers who are in desperate need of a certificate of status, copy of a corporate charter or other corporate documents. Sadly, as much as we’d love to be able to provide these documents to our customers on a same day basis, it is usually not in our power to do so.

Here’s why.

State filing offices typically provide two categories of service for corporate documents: mail in service and counter service. Mail in service is when an individual completes a request form for corporate documents (usually the form is available online) and mails their request along with a check to the state filing office for completion. Turnaround time for mail in service varies depending upon the state and their volume of orders at any given time.

Counter service refers to when an individual submits the request for corporate documents in person at the state filing office. A counter service request receives priority processing over a mail in request, but many states do not offer a “while-you-wait” service option even for counter service requests. In many cases, an individual must submit their request over-the-counter and return to pick up the requested documents once the state fulfills the order. The fulfillment process could take anywhere from one day to a couple of weeks.

Furthermore, state and county-level governments have endured overwhelming budget shortfalls over the last several years, dramatically affecting their ability to deliver timely public services. These budget woes often translate into slowed turnaround times for public record information requests.

Please see our previous blog post, “Tired of Slow UCC and Corporate Processing Times?” to learn about three strategies for getting your hands on the documents you need in time for your scheduled closing date.

Check back next week when we debunk another common misconception about UCC and Corporate Due Diligence!

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Top 5 Misconceptions About UCC & Corporate Due Diligence Series # 2: No Need to Order a Nationwide UCC Search

First Corporate Solutions Team — Tue, 19 Apr 2011 15:05:39 +0000

This week we tackle another common misconception relating to UCC and corporate due diligence: the need for a nationwide UCC search. On occasion, one of our customers will request a nationwide UCC search, meaning they want a search to reflect any UCCs against their party that were filed anywhere in the nation.

These searchers have the right idea: be diligent to find out as much as possible about your prospect’s existing financial obligations before making a funding decision. The last thing any lender wants is a surprise lien. While the intent is good, a nationwide UCC search is costly and unnecessary.

All UCC search methodology actually stems from UCC filing rules, which are established under Article 9 of the Uniform Commercial Code. The Code states that UCCs are to be filed in the following locations, based on the type of debtor:

Registered Business: file in the state where their organizing paperwork is filed

Unregistered Business: file in the state where they have their chief executive office

Individuals: file in the state where they hold their primary residence

In order to perfect a security interest, a UCC Financing Statement must be filed on the correct debtor name and in the appropriate filing office. A secured party who filed their UCC Financing Statement in the wrong jurisdiction will not enjoy a priority position to collect.

Searchers are typically interested in locating perfected UCCs since an unperfected filing does not represent a competing claim. Therefore, it is not necessary to perform searches beyond the indices described above. A nationwide search will confuse a search effort by reporting an abundance of similar name filings and/or unperfected UCCs.

Check back next week when we debunk another common misconception about UCC and Corporate Due Diligence!

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