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

*Disclaimer

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

*Disclaimer

The collateral description of a UCC Financing Statement is where the secured party details what items the debtor has offered as collateral to secure the loan; it is important. According to the Uniform Commercial Code, the collateral description must reasonably identify the collateral. The Code goes on to provide a few examples of what constitutes a reasonably described collateral statement, but that’s still a pretty subjective phrase. As you can imagine, there are many different schools of thought on how to describe collateral reasonably in order to satisfy the requirements under The Code.

To effectively mitigate a secured party’s risk for loss and fend off challenges from other creditors, a UCC filing must adequately describe the collateral, and figuring out how to describe the collateral on a UCC Financing Statement is a decision best made with the help of an attorney.

If you are in doubt as to how to describe the collateral for your transaction, confer with your legal counsel or risk management department to determine best UCC filing practices specific to your type of transaction.

To reduce UCC errors, the First Corporate Solutions online filing system, File ‘n Track, allows users to save unlimited collateral descriptions for future use. Contact us today at 800.406.1577 or info@ficoso.com for a free system demo.

 *Disclaimer

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.

*Disclaimer

At the state filing offices, UCC filings are accepted for filing and entered into the public record. Once every filing from a certain date is posted into the index, the state will advance their through date. A through date is the state’s way of saying, “We can guarantee that everything that was submitted to us for filing as of this date is now on record.” They are not saying, however, “There is nothing more current than the through date present in the data.”

A UCC index is dynamic, growing and changing all the time. The state is accepting new records and entering them into the public record, even as the process is underway to advance the date. Therefore, there are times when filings from beyond the confirmed through date can make their way onto the index.

It’s a slightly different situation for private service companies that maintain a proprietary search system. Private service companies build their search systems by purchasing bulk UCC and lien data from the state filing offices. Some states include a through date with their bulk data while others do not. If the state does not provide a through date along with their data, it is up to the service company to determine the currency of the data and assign a through date.

Figuring through dates is an inexact science. Service companies use complicated algorithms to check what filing dates are present in UCC and lien data to determine the currency of the data, then, to be safe, they back the date up by a few days. Because of this data backdating process, UCCs with a file date more current than the given through date may reflect on a UCC search report.

When reviewing UCC search results, never rely on the most recent filing reflected to determine the currency of the data; always refer to the through date to gauge how current your search report is.

*Disclaimer

In phase three of the due diligence cycle, a lender seeks to maintain their priority by managing post-closing events that can jeopardize their ability to collect. Herein we offer several strategies for maintaining priority after filing a UCC Financing Statement.

Perform a Search to Reflect

A search to reflect is a UCC records search of the office where you filed, after your document has posted to the index.  A search to reflect will confirm how the state indexed your document and reveal any typographical or clerical errors made when indexing your filing. These data entry errors can cause a filing to be difficult to locate in the public record and put secured parties at risk.

A search to reflect will also verify your position relative to any other creditors. A search to reflect will alert you if any other claims managed to sneak in ahead of your Financing Statement or if a lien was somehow missed on your initial search effort. A search to reflect offers assurance of a filer’s priority position to collect on debts by revealing their position relative to any other claimholders.

File Timely Continuations

As a secured lender, it is critical for a secured party to file timely continuations, as a lapsed filing ceases to be effective and opens the door for a subsequent filer to move into a priority position.

A UCC1 financing statement is effective for a period of five years from its date of filing. Every Financing Statement has a filing date and a corresponding lapse date. In order to extend the term, you must file a continuation statement prior to the UCC1’s lapse date. A Continuation Statement is acceptable for filing only within six months of a UCC’s lapse date; continuations submitted prior to the six-month window will be rejected by the filing office.

A Continuation Statement extends the term of the Financing Statement for an additional five years from the date of the original UCC1 filing, regardless of the filing date for the Continuation Statement. A filing’s lapse date is always calculated from the filing date of the original financing statement. Think of it as if the UCC1 is always allowed to finish out its initial term, and the continuation is tacked on at the end.

Monitoring Other Lien-Holder Activity

To preserve your priority position, it is also a good idea to monitor other lien holder activity. One way to accomplish this is to utilize a lien monitoring service to check for newly filed liens. These services will run interval searches on your debtor names to check for any new filing activity and alert you to potential credit risks. The idea behind monitoring programs is that the sooner you know, the sooner you can act to protect your interests.

If you decide to take advantage of a lien-monitoring service, consider monitoring your debtor names for federal tax liens, state tax liens, judgments, new UCC Financing Statements and Change Statements. For a more complete monitoring package, some services also offer litigation, bankruptcy and corporate status monitoring options.

Remember, you worked hard to obtain your priority position, do what you can to protect it!

When preparing and filing UCC Financing Statements remember to:

File under the correct name

For a business, this means the name as it appears on their organizing paperwork such as articles of incorporation/organization or partnership agreement. Avoid using states’ online corporate look-up features to determine the legal name of an entity as these databases can include abbreviations or typographical errors that could cause you to file under the wrong name.

When filing on a business name, there is no need to include any trade names on the financing statement. If you choose to include them on your filing, omit the “dba” notation. The “dba” is not a part of the entity’s legal name and including it can make your document difficult to find in the public record.

Determining the legal name for an individual can be difficult. In most cases, it will be the name on a person’s driver license or state-issued identification card, but it is a good idea to check the specific state UCC filing rules before filing on individual names to guarantee compliance.

File in the right filing office

Here is an overview of where to file UCC documents according the Uniform Commercial Code:

Registered Businesses: file in their home/domicile state

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

Individuals: file in their primary state of residence

Fixture Filings: file in the county where the collateral is located

Carefully review attachment pages

If you need to include attachment pages with your Financing Statement to list out specific collateral, be sure to carefully review all pages of the attachment before submitting the document to the filing office. Missing attachment pages can cause a UCC to inadequately describe the collateral, and that could be dangerous in the event of a competing claim.

Include the appropriate filing fee

A document that is presented for filing with the incorrect filing fee will be rejected. For information on filing fees, you can refer to the filing office’s website. Be mindful that some jurisdictions will charge additional fees for things such as additional debtors, attachment pages and non-standard forms.

Check back next week for another installment of The Three Phases of Due Diligence!

*Disclaimer

Increased Processing Times
Faced with dramatic budget cuts, State filing offices are struggling to meet the public’s demand for quick and efficient access to public records. In 2011, we are likely to see even more delays in the fulfillment of service requests including business filings, certified searches and document retrieval requests.

Proposed Changes to Uniform Commercial Code Revised Article 9
In 2010 the National Conference of Commissioners for Uniform State Laws (NCCUSL) voted to adopt the proposed changes to Article 9 of the Uniform Commercial Code. To date, three states (NV, ND and NE) have begun the legislative process to formally adopt NCCUSL’s proposed changes. More discussion, debate and legislative action is sure to follow throughout the year.

Pre-Lien IRS Monitoring for Tax Liabilities
Through the filing of IRS form 8821, a designated agent can receive pre-lien notification of a taxpayer’s federal tax delinquencies. Factors and Asset-based Lenders look to IRS form 8821 to learn of any developing tax issues involving their clients prior to the filing of a Notice of Federal Tax Lien. With more and more high-risk lending taking place, look for 8821 monitoring practices to increase this year.

Be sure to check the First Corporate Solutions blog regularly for information and updates on these and other developing stories in 2011!

*Disclaimer

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.

Be sure to check back next week for the final installment of the Evaluating State UCC Search Options blog series where we discuss the drawbacks of a proprietary database search!

*Disclaimer

Many small businesses have an internal department that handles all of their public records search and filing needs. As businesses grow and due diligence requirements get more complex, most decide to enlist the help of a private service company to carry out their public records requests. Deciding which company to entrust with your business can be a tough choice. Between nationwide and local vendors, there are hundreds (if not thousands!) of companies to choose from.

Here are three things to consider when evaluating a potential public records service provider:

1. Reputation & Experience

How long has the company been in business? What is their reputation within their industry and yours? The work a public records service company provides is critical to the success of your business so it is important to work with a company you trust. Ask around. Speak with others in your line of work and find out who they use and if they are satisfied. Another good way to learn about a company is to go online.  By visiting a company’s website you can often read their history, learn about their specialties and read testimonials from those that have used their services.

2. Location
Where is the company located? The physical location of a service provider matters for a couple of reasons. First, working with a service provider that is located within your same time zone ensures your phone calls and emails can be answered promptly. For rush requests especially, it is important to be able to reach your service representative during your normal business hours. Secondly, consider working with a service provider that is located in the region (state/county) where the bulk of your business lies. A service company that is located outside of this area will be forced to contract out your requests, incurring additional costs and taking extra time to complete projects.

3. Price
What does the company charge for the services you need them to complete? When evaluating service companies based on price, look beyond their service charge listed on their fee schedule. Does the company charge for delivery of results? Do they hire other agents to do the work and pass those fees along to you? What do they charge for copies? Do they offer volume or project discounts? These are all factors that can affect the overall cost of a public records transaction. And remember, online searches and filings are typically offered at a lower rate that their offline (manual) counterparts. Look to companies that offer online solutions to get the most for your due diligence dollar.

*Disclaimer