As 2011 draws to a close, First Corporate Solutions is taking to our blog to offer suggestions for how our readers can decrease their spending for due diligence related tasks in the upcoming year. Last week, we discussed strategies for reducing the costs for lien searches while this week we tackle UCC filings. Herein, we share a couple of simple changes you can make to reduce your UCC filing costs.

File Electronically

One of the most effective ways to reduce UCC filing costs is to file electronically. The filing fee for an electronically filed UCC document is often substantially lower than the fee to file the same document using traditional “over the counter” service. Electronic filing (aka E-Filing) is now available in most states and there are a couple of different ways to get your document on record electronically.

One common way to E-File a UCC document is by visiting a state filing office’s website and inputting debtor, secured party and collateral information into their online UCC filing system. Many states now offer this feature and users can pay either by using a credit card or by establishing a pre-paid account. This method is particularly useful for those who have infrequent filing needs.

For high-volume UCC filers, an even better E-Filing solution is to file electronically using a private service company’s web-based filing system. These systems use xml technology to transfer data directly to the state filing office. In some cases, the xml filing fee is a mere fraction of the manual filing charge. As an added benefit, many online filing systems include portfolio management tools to help you keep track of all of your UCC filing activity.

Reduce Rejections

Another simple way to drive down UCC filing costs is to reduce your number or rejected filings since the process of correcting and resubmitting a UCC document can get pretty expensive. In many states, the filing office will retain a portion of the filing fee for a rejected document. And if you work with a service provider to submit UCC documents on your behalf, they may charge a rejected filing fee or special handling charge to process your rejected document.

There is also the cost of labor to consider. When a filing office rejects your UCC document, it then requires more of your time to track down the correct information, make the change to the document and resubmit it to the filing office. This is time you or your staff could spend on other, more profitable tasks.

To reduce your number of rejected filings, try utilizing a service company that will perform a thorough quality review of your UCC filings prior to submission.

Mark your Calendar!

On March 15, 2012, First Corporate Solutions will be hosting a FREE webinar event, “An Insider’s Guide to Reducing Due Diligence Costs.” Check back on the blog or look to our website at www.ficoso.com for registration information as the event date approaches.

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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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As we have discussed on this blog on several occasions, 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.

In the years since RA9 took effect, several conflicting court decisions have left UCC filers with no clear guidance on how to name their debtors on UCC Financing Statements. As a result, secured parties are often unsure of how best to name their business and individual debtors to avoid being deemed seriously misleading by the courts in the event of a competing claim.

Perhaps the most important and most broadly applicable changes included in the proposed amendments involve new rules and clear-cut instructions for naming registered business and individual debtors on UCC Financing Statements.

The proposed amendment package also includes changes regarding:

• Maintaining perfection following a debtor relocation
• Requirements for transmitting utility filings
• The definition of a registered organization
• Changes to National UCC forms
• Change from Correction Statement to Information Statement
• Various other issues in the current version of RA9

The above listed changes are scheduled to go into effect in 2013 and thirteen states have already adopted the proposed amendment. Join us on November 08, 2011 at 11:00 am PDT for a free webinar, Impacts of the Upcoming Changes to Revised Article 9, to learn how you can prepare for the new Revised Article 9.

Register today! https://www1.gotomeeting.com/register/975247033

Our special guest speaker for this event will be Darrell W. Pierce of Dykema Law Group. Mr. Pierce served as a member of the Article 9 Study Committee for the Permanent Editorial Board for the Uniform Commercial Code, as Chair of the Article 9 Filing Project and as a primary drafter of the International Association of Commercial Administrators’ Model Administrative Rules for Article 9 filing offices. He is a frequent lecturer and writer regarding UCC matters.

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Delaware UCC Search Options

It is important to have a good working knowledge of a state’s search logic prior to ordering or performing UCC searches in that jurisdiction. With so many businesses organizing in the State of Delaware, it has also become a hotbed of UCC searching activity and in this blog post, we offer some information on performing UCC searches there.

Delaware Certified Searches

The Delaware Secretary of State provides certified searches only; there is no plain or uncertified option available from the state. With the exception of a few noise words, Delaware adheres to exact name search logic, meaning no name variations will be included on the search report. Due to the restrictive search logic used to generate a certified listing in Delaware, a searcher has to order a separate certified search for each name variation they can think of and those fees can add up rather quickly.

Delaware Online Searches
UCC searchers looking for a more inclusive and cost-effective search solution in Delaware often look to an online search system that will reveal name variations. The problem with online searching for Delaware is that the state does not make their UCC data available for purchase in bulk. Therefore, in order to offer Delaware searching on their private search system, a service company must purchase Delaware UCC data from a third party source rather than from the state filing office directly.

Third party databases can pose some real problems for UCC searchers because they are built through data collection efforts; essentially, the third party buys copies of filed UCC records and transcribes the data to recreate the state’s index. This transcription process opens the door for errors to be introduced into the data including misspelled party names, erroneous file dates, and sometimes we even see documents left off the recreated index entirely. Ultimately, these data entry errors compromise the integrity of the search result and translate into increased risk for any lender who relies on them to make a funding decision.

The FCS Solution
First Corporate Solutions has developed an innovative solution to help overcome some of the common problems associated with UCC searching in Delaware. Our Delaware UCC search solutions follow a two-step process. First, customers search our online data using flexible, broad-based search logic to generate a preliminary report that uncovers name variations. Then they select from three follow up search options that supplement the online data to ensure the accuracy and completeness of reported liens.

Our follow up search options complement the preliminary online listing to generate the most complete and most accurate DE UCC search available anywhere. Visit our website at http://www.ficoso.com/delaware-ucc-solutions.aspx or call a customer service representative at 800.406.1577 for more information on flexible Delaware search options from First Corporate Solutions.

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For tax liens, the taxpayer’s principal address determines the filing location. When searching for tax liens then, you will search in the state where the taxpayer holds their principal address. It gets a little tricky though. There are no nationwide rules for what filing office administers tax lien records; rather each state independently decides where tax liens will be filed in their jurisdiction. Within the state where the taxpayer holds their principal address, a tax lien may be filed at the state-level, or the county level, or sometimes both.

State governments attempt to set standards for where tax liens are to be filed based on whether the taxpayer is a business or individual. However, when searching the tax lien records, we tend to find them mixed together regardless of what records the filing office is supposed to administer, regardless of whether the taxpayer is a business or individual.

In California for example, according to statute tax liens on businesses are filed at the Secretary of State’s office while tax liens on individuals would be filed at the County Recorder’s office. What we actually find though is that both filing offices accept liens on businesses and individuals. As a result, an exhaustive tax lien search here would include a search of both the state and county filing offices.

Another important thing to keep in mind when searching for tax liens is that they may be maintained on a separate index from a filing office’s UCC records. In these cases, a separate search of that secondary index will be required to locate involuntary liens.

Tax Lien and Judgment Lien searching can be confusing because of all of the different variables that come into play. It’s a good idea to work with a service provider you trust to carry out your tax lien searches. First Corporate Solutions works with a highly trained network of local search agents to deliver search results you can count on. Contact us today to learn more about our nationwide search services or to place your order today! 800.406.1577 | info@ficoso.com

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Now, we’ve combined these popular blog posts into an FREE educational webinar event! Join us Wednesday, September 22, 2011 at 11:00am PDT for live presentation of, “An Insider’s Guide to Performing Lien Searches”

Designed for the beginning-level lien searcher, or experienced searchers looking for a refresher course, this presentation offers a conceptual overview as well as practical tips and best practices for interacting with public records data. With this webinar, we aim to provide participants with the tools necessary to secure high quality, dependable search results.

 Topics Include:

- Who, What and Where of Lien Searching

- Importance of Searching for Involuntary Liens

- Evaluating State UCC Search Options

- Tips for Becoming an Effective Lien Searcher

Follow this link to register for An Insider’s Guide to Performing Lien Searches!

https://www1.gotomeeting.com/register/264454209

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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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A couple of weeks ago, we featured a post on the blog titled, “Costs for Performing UCC, Lien and Litigation Searches” in which we discussed the types of fees you may encounter when hiring a service company to perform public records research, including: service fees, correspondent/agent fees, statutory/jurisdictional fees and copy costs. In this week’s blog post, we are going to share some additional information on copy costs and offer a couple tricks to keep your copy costs down.

For most search efforts, whether self-searching through the use of online resources or placing a service request with a vendor, if there are results associated with your search effort then you will incur a per page copy fee. This fee will vary depending on jurisdiction and the source of the copy, but typically, copies run between $1.50 and $3.00 per page.

Here are a couple of tips to help you keep your copy cost in check.

First, you may want to order a listing only first to get an idea of what items are on record before you commit to purchasing copies, especially when performing searches on common names. You may find there is nothing on the listing that you didn’t already know about either from credit reports or applicant disclosure.

Another option to consider is a updated (aka date-forward) search. Updated searches are limited in scope in that they only disclose records from a given filing date forward, excluding those filed prior to that date. If you have worked with a particular borrower before and have a previous search in your records, you may be able to limit the results and corresponding copies to only those filings that are newly recorded since your last search effort.

Sometimes, a vendor will offer to get copies of document face pages only, meaning they will not provide copies of any attachment pages. The problem with face page only copies is that, in many cases, the collateral description for a UCC is included on an attachment page. In these cases only getting the face page copy will not reveal what specific collateral the debtor has pledged. For those UCCs, you will then have to go back and order the full copy of the document, likely incurring another service fee and certainly more copy charges from your vendor.

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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A creditor must file their UCC1 Financing Statement quickly and correctly In order to perfect their security interest. Rejected UCC filings can prove costly for lenders as they open the door for secondary parties to claim a priority position. In this blog post, we offer a few tips to avoid rejection of your UCC documents.

In truth, there are not many errors you can make that will cause a filing officer to reject a UCC document. For the filing officer to accept a UCC for filing, the document must meet a set of minimum requirements. These requirements vary a little from state to state, but in many cases, all a filing has to do is include a debtor name and address, a secured party name and address and a collateral statement. If a UCC document meets the minimum requirements and the correct filing fee accompanies the document, the Uniform Commercial Code directs the filing officer to accept the document into the public record.

Here are a few simple steps you can take to reduce your number of rejected UCC filings:

• Forward the right payment for your UCC filing. When in doubt, you can always check the state’s website for information on filing fees. Remember, you may encounter additional charges for multiple debtors, attachment pages or the use of a non-standard form.
• Make sure the document is legible. Keep in mind that the definition of a legible document is evolving as technology advances. Presently, most states will reject a document that, while legible in hard copy form, will not scan well into their electronic database.
• Complete all of the necessary fields on the form for your specific type of transaction.
• For UCC3 filings, make sure you include the correct UCC1 filing number on the document. The filing office will likely reject a UCC3 that lists a number that does not match any of their active records.
• Keep a close watch on your UCC lapse dates and submit your continuation statements within the 6-month window; continuations that are submitted too early will be rejected by the filing office.

The First Corporate Solutions online filing system, File ‘n Track, uses form-filler technology to guide the UCC filing process and reduce filing mistakes. Contact us today at 800.406.1577 or info@ficoso.com  for a free system demo.

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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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