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New Mexico - March 1st, 2018 New Mexico had a bill signed into law changing biennial report due dates for corporations.  On July 1st, 2018 all biennial reports will be due on the 15th Day of the 4th month after the fiscal year for corporations.
Texas - New House Bill, that went into effect on June 1st, clarifies all names must be distinguishable in the records of the secretary of state from other entity’s legal or fictitious business names.
Florida - Starting July 1st, state banks and trust companies overseen by the Florida Office of Financial Regulation are allowed to form as social purpose or benefit corporations.
Virginia - On July 1st corporations are no longer required to list the number of shares by class in their annual reports.
Check back for more Jurisdictional Updates throughout the summer.

Back in 2013, recent amendments to Article 9 took effect. One of the amendments provides that a driver’s license is the best source for determining the legal name of an individual when filing a financing statement.
The question of two different names on a driver’s license arose in the recent case In re Pierce, 2018 Bankr. LEXIS 287 (Bankr. S.D. Ga. Feb. 1, 2018). Farm Bureau Bank (the “FBB”) made a secured loan to Kenneth Pierce (“Debtor”) on June 18, 2015 to finance the purchase of a fertilizer spreader for his farm.  To secure their interest, on June 23, 2015, FBB filed a UCC-1 financing statement which listed his name as “Kenneth Pierce.”
The debtor’s unexpired Georgia driver’s license, included both the printed name of the licensee & the licensee’s signature. The printed name on the license included the full middle name. However, the signature was simply “Kenneth Pierce.”
In April of 2017, the Debtor filed for bankruptcy. The following month FBB filed a proof of claim for the outstanding balance of $14,459.81 of the loan. The Debtor, in turn, filed an objection to the claim. The Debtor argued that FBB’s financing statement failed to sufficiently provide the name of the debtor making the UCC-1 seriously misleading, &, as a result, FBB’s security interest was unperfected & its claim unsecured.
Certain requirements must be met under the UCC in order to perfect a security interest on collateral. It is undisputed that in this case FBB’s security interest attached to the fertilizer spreader for UCC purposes. The issue here, however, was whether FBB’s security interest was perfected.   
One of the requirements for properly filing is providing the debtor’s name. The 2010 amendments of Article 9, specifically debtor name rules, needed to be reviewed by the Court. The amendments gave two options to filing offices for debtor name standards: “Alternative A or Alternative B”. Alternative A, which is the standard Georgia opted for, provides that for an individual, the financing statement is sufficient only if it provides the debtor name of the individual which is indicated on the driver’s license. Alternative B provides a safe harbor provision that could allow multiple variations of an individual’s name to be sufficient for purposes of the financing statement.
The debtor argued that since the name on the UCC-1 did not match the name printed on the license, it did not meet the UCC individual debtor name sufficiency requirements. It was argued that due to there being two names on the license, both the printed name as well as the signed name, either should meet the requirements.   
The court analyzed whether the phrase “indicated on the driver’s license” in the Amendments referred to the printed name only or if it would also include the signed name as well.   
The court reasoned that by electing to adopt “Alternative A Only if” rule, the Georgia legislature had intended for more certainty in regards to debtor names. Allowing two ways of identifying the debtor, would thwart the legislature’s intent. It was decided that if both the printed name & signed name were allowed to fulfill the individual debtor name requirement, it would not meet the legislature’s intent. It also noted that signatures were often illegible. Using the name printed on the driver’s license “ensures simplicity & predictability.” 
The court also analyzed the case of Genoa Nat’l Bank v. Southwest Implement, Inc. (In re Borden) (353 B.R. 886 (Bankr. D. Neb. 2006)) for guidance. In this case, the debtor was identified by his legal name “Michael Ray Borden” or by “Michael R. Borden” on his driver’s license & on other legal documents, however he often signed legal documents by his nickname, “Mike Borden.” The court held that financing statements identifying the debtor as “Mike Borden” were “seriously misleading.” This case suggested to the court that the name typed on legal documents is more important than the signed name. Further, the court found support for this in the instructions on the actual UCC-1 form. The form states to use the debtor’s “exact, full name” without omission, modification, or abbreviation.
The court determined that the typed name on a license or legal document trumps the signature. It was ruled that the Debtor’s objection to the Bank’s proof of claim were sustained since the Bank failed to carry its burden.
The lesson learned here is that if the Debtor is an individual, then the printed name on the driver’s license, not the signature, is the correct name to use for purposes of filing a financing statement. The court noted that if FBB had followed the form instructions, it would have provided the debtor’s full name. If there is any doubt about the debtor’s name, for example if there is a discrepancy between the printed name & the signed name on the Debtor’s driver’s license, the secured party should file its UCC-1 financing statement using all name variations.

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Having a Registered Agent ensures lawsuits and legal documents will be delivered privately. There won’t be any law enforcement officers showing up at your place of business which could potentially have a negative effect on your reputation. Additionally, you will keep your address private, which will limit the amount of mail from marketers. Capitol Lien prides itself on its professionalism and its attention to details in this regard.
Registered agents can be useful for companies that do not operate during normal business hours because they can still get important information delivered during normal business hours elsewhere.
Through the use of a Registered Agent you can have an address in a certain state without the need for a physical business location. This also relates to businesses that do not have a permanent address or remote businesses. Businesses where the workers are either working remotely or always traveling for work may find it hard to receive any important information that could potentially be delivered.
Changing your Registered Agent to Capitol Lien is a simple task that will benefit your company. The perceived hassle of changing Registered Agents may be keeping you from receiving the quality of service you deserve, limiting the services you are provided, and/or causing your company to be overcharged. Capitol Lien does not charge for changing your registered agent to us.
Capitol Lien provides exceptional Registered Agent Services. Online tools for compliance, entity management and important resources are available to make your job easier.
-Idaho HB 379 (signed by the governor March 1, 2018) relates to nonprofit corporations. The bill amends the nonprofit corporation law to require only one incorporator to sign articles of incorporation upon formation. Effective July 1, 2018.
-Indiana SB 180 (signed by the governor March 13, 2018) relates to the Business Organization Code and Transactions Act. The bill changes the required information submitted in filings to the Secretary of State, qualification/registration of foreign entities, use of business entity names and administrative dissolution. A business entity can apply for reinstatement within 5 years after the date of dissolution or active status revocation. Effective January 1, 2018.
-New Mexico SB 225 (signed by the governor March 1, 2018) relates to the biennial report due date for corporations. Effective July 1, 2018, the biennial report for a corporation will be due the 15th day of the fourth month after the end of the corporation’s tax year.
-Tennessee SB 1942 (signed by the governor on March 16, 2018) relates to partnerships filed pursuant to the Uniform Limited Partnership Act. The bill requires limited partnerships to be in good standing with the Department of Revenue, with all fees, taxes and penalties current, before certain filings can be executed. In addition, the bill requires additional information be provided for certain partnership filings.
-Utah HB 186 (signed by the governor on March 19, 2018) enacts the Benefit Limited Liability Company Act. The bill provides for the formation of a benefit company, addresses the termination of a benefit company, requires a benefit company to adopt a purpose of creating general public benefit, establishes standards of conduct, creates a right of action and requires a benefit company to prepare, distribute, and make public an annual benefit report. Effective May 8, 2018.
-West Virginia Article 3 §11A-3-2a relates to purchase by municipalities and counties of delinquent lands. Where by the sheriff shall give specific notice to municipalities and the county commission of any real property in their jurisdictions with delinquent taxes for which a tax sale is eminent. Within thirty days of such notice, the respective municipality or county may purchase the real property for the taxes (interest and charges due thereon only subject to the property owner’s rights of redemption). If a sale is made to a private purchaser notwithstanding a lack of response to the notice of sale to the municipality or county, the municipality or county may purchase the property within thirty days of the sale to the private purchaser if they reimburse the private purchaser all payments made for his or her purchase within ten days of the date the municipality or county purchases the property. The provisions of this section do not affect the right of the original property owner to redeem his or her property.
The UCC lien protects lenders from authorizing additional loans that contain the same assets as collateral. It allows them to maintain their financial interests. UCCs are public record and proper due diligence should be done as a part of the loan application process to determine which assets are already collateralized. These liens are managed under the Uniform Commercial Code, the code attempts to enforce uniformity in how state jurisdictions process UCCs.
It’s important to know that in most cases, a UCC filing will not have any direct impact on business operations. If no additional borrowing needs exist and the debtor does not default on the loan, then the UCC lien should cause no concern.
However, starting a loan application process there are risks associated with having a UCC filing against assets that need to be considered. Three main risks exist when a UCC lien remains active against a debtor. First, a UCC may prevent a debtor from obtaining additional financing. This is the most common effect a UCC can have to a debtor since lenders usually want their debtor to be lien free prior to finalizing a loan. Secondly, a UCC can impact a credit report. It won’t impact the actual score, but it will appear which will give insight into borrowing history. Thirdly, there is the risk of losing secured assets. Until the loan is paid off, there is always potential the property could be seized if there is a default.

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Where does a UCC originate from?
Typically when a debtor (entity or individual) agrees to pledge assets to a secured party, usually a lender, for a loan or line of credit, a security agreement is signed. The security agreement provides the secured party with the ability to use specific assets as collateral. Once the loan is finalized, a UCC lien is filed against the assets pledged, which gives notice of the lender’s rights to the public.
On average UCC’s follow strict priority, the first secured party to file a lien against a debtor will have first rights to that asset or assets listed on their particular UCC. In the situation of a defaulted loan, the lender is essentially holding their ‘spot in line’ to collect on those assets pledged.
For example, if there is a piece of equipment that Lender A filed a UCC on, and Lender B also files a lien on the same piece of equipment, Lender A has first lien position rights to the equipment. If the debtor has defaulted and the equipment is being sold to pay debts, Lender A will be paid off first, and Lender B will receive any leftover funds after the first priority lien position is completely repaid.
There are two types of collateral for a UCC: Blanket or Specific.
A blanket lien takes ALL current, and at times, future assets of the debtor as collateral. This UCC is common for traditional, SBA and alternative bank loans. Traditional and SBA bank lenders use blanket liens to fully secure the loan. All assets of the debtor are factored into the lending decisions. When businesses do not have a lot of hard assets for a loan, they may seek out an alternative lender, at times it’s the only way to get funding when there is not enough assets to satisfy a standard loan. Blanket liens are preferred because the loan is secured with all debtors assets instead of just a single asset. The underwriting process is typically more flexible when dealing with a blanket lien, it allows lenders to provide funding more quickly. Also, lenders are usually willing to take a 2nd or 3rd position when the loan is short-term.
Conversely, a UCC can lay out specific collateral items. This type of lien protects one or more assets to secure the loan or credit agreement. Specific collateral liens are most common for loans that have a specific purpose, such as inventory or equipment financing.
The following are some common types of specific assets that might be listed on a UCC filing:
  • Commercial instruments (such as drafts or promissory notes)
  • Equipment (multiple types)
  • Inventory
  • Investment securities
  • Large operating equipment
  • Letters of credit
  • Office equipment
  • Real Estate (including fixtures)
  • Receivables
  • Other goods or intangibles owned or used by the debtor
  • Vehicles

Contact Us today for the best in nationwide filing expertise & services to make you the hero to your company.

In celebration of adding yet another state in the Midwest, many are just recently learning of what Database Direct has to offer. As expansion planning for this robust system continues we wanted to make sure you were one of those people.
Are you a professional at a lending, legal or auction-related organization? Do you like dealing with contracts and subscriptions while maintaining debit accounts and getting charged additional fees?
If you answered “Yes” to the first question and “No” to the second you could be a great candidate to give Database Direct a try.
Brought to you by Capitol Lien, Database Direct is a comprehensive online system through which users can perform state level UCC/Tax Lien searches in available states and manage UCC filings nationwide.
File:  With easy to navigate prompts, auto-populated text and the ability to customize collateral, this tool is intended to streamline all of your UCC procedures. Amending and terminating your UCCs is effortless once they are in the system. Depend on the Continuation Report to view and continue any of your UCCs in the critical continuation window.
Search:  Leverage our unique broad-based search logic for thorough results with hundreds of business and first name equivalents. Designed to search for common name variations, our enhanced system enables the user to see more “hits”, as well as help uncover otherwise “hidden” liens. To date the available states for your searching pleasure are Minnesota, Wisconsin, and South Dakota. Illinois will be the next state to be added in 2018!
Grow:  Take your business to the next level with the help of our generated leads. Target competitors with a Secured Party Search (aka Reverse UCC Search) or hone in on a specific region with an Area Search.
Register Today:

Feel free to email This email address is being protected from spambots. You need JavaScript enabled to view it. with any system inquiries.

State Closures:
12/22/17 Christmas Holiday: Illinois, Michigan, South Carolina
12/25/17 Christmas Day: All States
12/26/17 Day After Christmas: Florida, Georgia, Kansas, Maine, North Carolina, Oklahoma, South Carolina, South Dakota, & Tennessee
12/27/17 Christmas Holiday: North Carolina 
1/1/18 New Year’s Day: All States 
1/2/18 New Year’s Holiday: Tennessee 
1/12/18 Lee-Jackson Day: Virginia 
1/15/18 Martin Luther King Day: All States 
1/19/18 Robert E. Lee Day: Florida 


Jurisdictional Updates:
North Carolina: House Bill 228 (Session Law 2017-23) signed by the governor and effective June 2 postponed for five (5) months until December 1, 2017 the implementation of the new Assumed Business Name Act law enacted by Session Law 2016-100. Register of Deeds offices will upload assumed name information to a searchable online statewide database for assumed names to be maintained by the Secretary of State.
Minnesota: The Secretary of State reminded all Minnesota LLCs formed prior to August 1, 2015 that they will become subject to Chapter 322C beginning January 1, 2018 as Chapter 322 B is repealed.  In 2014 the legislature enacted the Revised Uniform LLC Act which took effect August 1, 2015 & enabled existing LLCs to elect to be governed under the new act or to remain under the prior LLC law Chapter 322B until January 1, 2018.  Customers with LLCs formed prior to August 1, 2015 should review LLC operating agreements for compliance with internal governance requirements under Chapter 322C.
Oregon: Starting January 1, principle place of business & officer/director/member/manager information will be REQUIRED when entities file their articles; there will no longer be an option to wait until filing their first annual report. The old forms will NOT be accepted after the first of the year.  
South Carolina: Appraisal Management Licenses
All appraisal management companies registered in South Carolina must obtain an appraisal management company license with the Department of Labor, Licensing & Regulations. Registration must be completed no later than February 1, 2018. 
Indiana: Senate Bill 443, effective January 1, 2018, enacts the Uniform Business Organizations Code & the Uniform Business Organization Transactions Act, governing various issues, including filings with the Secretary of State, names, registered agents, foreign entities, administrative dissolution, fees, mergers, interest exchanges, conversions & domestications for all business entity types.
A proper financing statement must provide the name of the debtor, and there are fairly strict requirements for the sufficiency of the debtor’s name.  (See UCC§§ 9-502& 9-503.)  If the debtor’s name changes such that the name on the financing statement no longer matches the debtor’s name closely enough to avoid being seriously misleading when measured after the name change, the effect of the financing statement is limited.
A financing statement that previously sufficiently provided the name of the debtor but that would be seriously misleading if measured after the name change still provides the secured party with two things:  continued perfection for collateral acquired before the name change and a four-month opportunity to amend the financing statement to provide the debtor’s new name and extend the effect of the financing statement.  (See § 9-507(c).)
A security interest perfected by a proper financing statement remains perfected despite the debtor’s name change with respect to assets of the debtor as of the date of the name change or acquired within four months thereafter.  (See § 9-507(c)(1).)  Practically, it will be important to have a detailed and current collateral list, to have some evidence regarding what assets the debtor had and when those assets were acquired.  Imagine a credit transaction,shortly after the name change, where a competing party gives value to the debtor and the debtor grants a new security interest.  The new secured party obtains a UCC search report using the debtor’s new name, which report does not reveal the existing filing using the debtor’s old name.  Having taken on too much debt, the debtor promptly defaults, and the new secured party takes possession of the debtor’s assets.  You want to recover your collateral from the competing secured party.  Among other things, you will need to prove which assets are your collateral, hence the need for a detailed and current collateral list.  Fortunately, the UCC allows for continuing perfection and priority, at least in certain collateral, despite the name change. 
Within four months after the name change, a secured party can amend its financing statement to provide the debtor’s new name and preserve the perfection and priority, despite the name change, even in assets of the debtor acquired more than four months after the name change.  (See § 9-507(c)(2).)  A “late” amendment – that is, one filed more than four months after the name change – would work like an amendment adding a debtor; it would provide perfection and priority only from the date of the amendment.
There is good reason to include a term in your agreement that requires a debtor to notify you immediately if the debtor changes its name.  Prudence also suggests periodic monitoring, in case the debtor fails to notify you.  And, in any case, there is good reason to act promptly if you learn of a debtor name change.
Say you are a secured party with a filed financing statement.  For whatever reason, you obtain a search report for filings naming your debtor.  The report shows your unlapsed financing statement, but, unexpectedly, it also shows a termination of your financing statement!  What can you do to try to create evidence and provide notice that a termination statement was unauthorized?
Who filed the termination statement?  There are important differences among terminations filed by the debtor, filed inadvertently or improvidently by the secured party, or filed by someone other than the debtor or the secured party.
A debtor is entitled to file a termination statement under certain circumstances, including where the debtor properly demanded a termination from the secured party but the secured party failed to respond or where the debtor did not authorize the initial financing statement.  See §§ 9-509(d) & 9-513 (a)&(c).  Outside of these circumstances, and absent authorization by the secured party, a termination statement filed by the debtor is unauthorized.
A termination statement filed by a secured party is probably not “unauthorized” even if it is inadvertent or improvident; in other words, a termination statement “filed by mistake” is nonetheless a filed termination statement, and “unwise” or “regrettable” does not mean “unauthorized.”  An inadvertent termination statement could arise, for example, where a secured party seeking to file a continuation or some other amendment accidentally selects the termination option.  An improvident termination statement could arise, for example, where a secured party files a termination statement after Loan 1 is paid in full without realizing that the security interest for Loan 2 is also perfected by the same financing statement.  A hybrid of inadvertent and improvident could occur where the secured party mistakenly files a termination statement for the financing statement connected to Loan 2 when the secured party meant to terminate the different financing statement connected to Loan 1.  In any case, a termination statement filed by the secured party is seldom unauthorized.
A termination statement filed by someone other than the debtor or the secured party, or an agent of either of them, is more likely to be unauthorized.  One situation that arises from time to time involves a new lender/secured party filing a termination statement purporting to affect the financing statement of the “old” lender/secured party.  Another situation involves some other filer creating a typo in the identification of the initial financing statement in an otherwise proper termination statement and accidentally connecting their termination statement to your initial financing statement. These are examples of unauthorized termination statements.
What if it is truly an unauthorized termination statement?“A person may file in the filing office an information statement with respect to a record filed there if the person is a secured party of record with respect to the financing statement to which the record relates and believes that the person that filed the record was not entitled to do so under Section 9-509(d).” § 9-518(c).  The form is a UCC-5 Information Statement.  The information statement must indicate that it is an information statement – which the form inherently does – and requires just two data elements: the file number for the initial financing statement to which it relates, and the basis for the filer’s belief that the person that filed the termination statement was not entitled to do so under § 9-509.
A sample statement of the basis for a claim of an unauthorized termination statement might be something like:
The person filing the purported termination statement was not the secured party, was not authorized by the secured party, and was neither the debtor nor an agent of the debtor acting under circumstance where a debtor could be entitled to file a termination statement after a failure of the secured party to do so in a timely manner.

What is the effect of filing an Information Statement?  Well… The UCC specifically states that “[t]he filing of an information statement does not affect the effectiveness of an initial financing statement or other filed record.”  § 9-518(e).  The logic is that an unauthorized termination is not effective in the first place, and the information statement is merely a flag rather than a correction.  There is utility in filing an Information Statement to draw attention to unauthorized termination.  It flags the unauthorized filing which should prevent subsequent reliance on the effectiveness of the unauthorized record; imagine your office decided not to file a continuation because someone erroneously believed the financing statement had been terminated. It contributes to the integrity of the filing office’s database; flagging errors makes the system more accurate and reliable for everyone.  And it creates some evidence of the secured party’s diligence in monitoring its financing statements; whether it is a competing secured party, a bankruptcy trustee, a regulator or auditor, your boss, or anyone else asking, wouldn’t you prefer to be able to show that you recognized the issue and flagged it?


Article 9 of the Uniform Commercial Code requires that a financing statement, to be effective, must indicate the collateral that it covers.  A common and useful practice is to specify types of assets that are collateral using UCC Article 9 definitions of asset types.
Some common asset types defined under UCC Article 9 include accounts, chattel paper, documents, equipment, general intangibles, instruments, inventory, and investment property.  See § 9‑102.  It is important to be aware of the UCC Article 9 definitions.  Though many people would be prompted to search for a definition of uncommon terms like chattel paper or general intangibles, many people fail to realize that otherwise ordinary terms like accounts, documents, and investment property have specific meaning under UCC Article 9.  Here are some common misunderstandings:
An “account” is a “right to payment of a monetary obligation…” with certain specific exclusions, notably including “deposit accounts.”  See § 9-102(a)(2).  Typically, a bank account is a deposit account, but a bank account is rarely, if ever, an “account.”
A “document” is a “document of title or a receipt of the type described in § 7-201….”  Books, business records, databases, customer lists, invoices, receipts, bank records, manuals, logs, and the like are not documents under the UCC Article 9 definition.  The UCC Article 9 definition of “document” involves two more issues; it makes explicit reference to another article of the UCC, Article 7, and incorporates an implicit reference to still another article of the UCC, Article 1.  The explicit reference to § 7-201 is easy to see; the use of “document of title,” which is defined in UCC Article 1, is more difficult to appreciate.  See § 1-201(b)(16).
TIP:  Article 1 of the Uniform Commercial Code includes a batch of approximately 40 definitions, including common words like “agreement,” “money,” and “security interest.”  Article 1 also separately describes concepts such as “notice” and “value” and provides guidance on the difference between leases and security interest.  Article 1 applies to all transactions under the UCC (see § 1-102).  Familiarize yourself with Article 1!
“Investment property” does not rely on the investor’s intention, so things like precious metals, artwork, or other rare goods do not become investment property simply because one acquired them “as an investment.” Under the UCC Article 9 definition, investment property “means a security [], security entitlement, securities account, commodity contract, or commodity account.”  See § 9-102(a)(49).  By the way, every one of those things is also a defined term under the UCC, some of which require reference to UCC Article 8.
Some people also overlook the context necessary to select an appropriate collateral type.  As an example, the tools and machines that one can rent at the local rental shop may look like equipment to the renter but they are inventory to the rental company.  (Remember, “inventory” includes goods for lease.  See § 9‑102(48).)
Again, it is a useful practice to specify types of assets that are collateral using UCC Article 9 definitions, but doing so requires an understanding of the definitions.  Start with § 9-102, but don’t stop there!

State & Federal Holidays

July 24th Pioneer Day UT
August 14th Victory Day RI
August 16th Bennington Battle Day VT
August 18th Statehood Day HI
September 4th Labor Day All States; Capitol Lien Closed

Jurisdictional Updates

West Virginia – Nonprofit Corporation Articles of Incorporation Fee Increase

Senate Bill 547: Effective July 7 increases filing fee to $100.00 for nonprofit corporation Articles of Incorporation & authorizes expedited service fees up to $500.

The Following State changes became effective on July 1st:


House Bill 169: (Chapter 2017-47) amends fictitious name registration act to repeal the sworn statement, clarify requirements & time periods for registration, renewal & cancellation, & prohibit use of business entity endings.


House Bill 87: (Act No. 47) authorizes to provide for annual registration of business entities to be valid for a period up to & including three (3) years & permits conversions of foreign corporations to domestic corporations & conversions of domestic corporations to foreign corporations.


House Bill 54: (Session Law Chapter 34) corrects oversights from the 2015 enactment of the Business Organizations Code to clarify certain fee names & remove fees that are no longer charged.


House Bill 4361: (Public Act No. 637) amends the Limited Liability Company Act to, among other things, update conversion, merger & domestication provisions; permit filing of a statement of authority or limitation of authority to execute instruments transferring real property or to enter into other transactions on behalf of the LLC; permit filing of a statement of termination after winding up a dissolved LLC; expand the scope of operating agreements; & protect LLC names for 3 years after administrative dissolution.

House Bill 363: (Chapter 64) exempts from recordation & transfer taxes the transfer of real property from a sole proprietorship to a limited liability company if the LLC’s sole member is identical to the converting sole proprietor.


Senate Bill 2327: Amends requirements for conversion & domestication including the time period to correct a filed document.


Assembly Bill 13: (Chapter 5) changes the name of “state business registration” to “state business license” to be obtained when filing the initial or annual list.

North Carolina

Senate Bill 124: (Session Law No. 2016-140) modernizes the law governing the use of assumed business name filings.

South Dakota

House Bill 1038: Repeals the requirement for farm corporations to file annual reports with the SOS.


House Bill 23: Permits SOS to return rejected documents within 15 days instead of 5 days; send notices by regular mail or e-mail instead of certified mail; & cease publication of notices that LLP registration has lapsed.

Earlier this year, the Consumer Financial Protection Bureau published some “supervisory observations” based on its vision of the implementation of the Fair Credit Reporting Act. One area with respect to which the CFPB expressed concern was “data accuracy.” Specifically, the CFPB observed that, generally, credit reporting companies (CRCs) had less-than-ideal data governance policies, procedures, and practices.
One data accuracy issue involves the level of certainty that one requires regarding identification of a consumer before including information on that consumer’s report. The CRCs aggregate information from myriad sources, and those sources have varying standards and formats for the information they provide. The CRCs sought to screen the information they received to identify consumers, but instances did occur where inaccurate information was included on some consumer reports.
Consider a credit report concerning John Q. Publik. Imagine that the state where Mr. Publik resides provides civil judgment information, but the state does not report middle initials. What should a CRC do with data that identifies “John Publik” and otherwise appears consistent with other known information about John Q. Publik – include it or not? Imagine that the tax authorities provide tax lien information, but there are 50 John Q. Publiks in the database. Again, what should a CRC do with data that identifies “John Q. Publik” and otherwise appears consistent with other known information about a particular John Q. Publik – include it or not?
The bar is being raised for the level of certainty that CRCs will be expected to have before they include information on consumer reports. One near-term effect of this change is that CRCs will remove information currently being reported, including civil judgment and tax liens, that does not satisfy enhanced standards for positive identification of the debtor. Likewise, going forward, CRCs will not include new information that does not satisfy enhanced standards for positive identification of the debtor. On one hand, the accuracy of some credit reports could be improved because there will be fewer “false positives”: liens or judgments reported as affecting a consumer other than the consumer to which they really apply. On the other hand, the completeness of credit reports will be diminished because there may be more “false negatives”: liens or judgments that do affect a consumer but which are nonetheless not reported because the identifying information was not robust enough for the CRC confidently to include the information.
Creditors and other users of credit reports should consider augmenting their due diligence by obtaining judgment and tax lien searches from a trusted source – understanding that the CRCs may leave a gap.
When looking to uncover civil judgments, request searches at the court database in the county [or counties] indicated as the consumer’s recent and previous residences. Also, if you are concerned about any liens filed against particular real estate, request a property search in the county where the real estate is located. Lastly, you can request searches for judgments in the federal district indicated as the consumer’s recent and previous residences.
When trying to find tax liens, request searches to be performed at the centralized tax lien database in the state [or states] indicated as the consumer’s recent and previous residences. This search reveals tax liens on personal property assets, analogous to a UCC‑type security interest. Again, if you are concerned about particular real estate, be sure to order a search where the property is situated. This search reveals tax liens that may be recorded on real property.
The stated roll-out for the changes to the credit reports is on July 1, 2017, but it is likely that some reports are changing already. Do not delay in updating your due diligence practices!
There is much information that can be conveyed in even a brief statement about a transaction if certain vocabulary is consistently applied. Conversely, there is much confusion that can be caused – and delay and expense incurred – if that vocabulary is not given due respect. The following is a general discussion of some terms relevant to organizational transactions often involved in discussions of “mergers & acquisitions.” 
merger requires at least two constituent organizations (or “constituents”). After a merger, the surviving organization (or “survivor”) will retain its legal existence, but each non-surviving organization (or “target” or “merged organization”) loses its separate legal existence. Generally, the survivor will come away from the merger with all the assets and liabilities of the target, in addition to the survivor’s pre-merger assets and liabilities. When reviewing organizational records, look for the Articles of Merger, typical with corporations and LLCs, or the Statement of Merger, typical with partnerships. 
consolidation involves at least two constituents joining to form and become a new organization, often vaguely called a “resulting organization;” it is a fairly rare type of transaction. 
conversion allows an organization of one type (e.g., a corporation) to charge its form to another type (e.g., an LLC). When reviewing organizational records, look for the Articles of Conversion (for a corporation or LLC) or a Statement of Conversion (for a partnership). 
domestication allows a foreign organization – that is, one formed in another jurisdiction – to become a domestic organization – that is, one now governed by the statutes of the new jurisdiction applicable as though the organization had been organized in the new jurisdiction initially. 
An exchange involves an organization, the acquirer, purchasing some or all of the shares or membership interests of another organization; it is commonly called a “stock sale”. (In this context, “purchasing” means “voluntarily receiving;” there are a myriad of possible terms for such a transaction, and it may or may not involve an easily identifiable “sale.”) 
An “asset sale,” sometimes vaguely called a “transfer,” involves an organization purchasing assets of another organization. Most usage of the term involves a transfer of all or substantially all of the assets, leaving the other organization legally existing but with few assets, if any. If an organization has no assets or ongoing operations, the organization is “defunct.” 
Some usage of “acquisition” is to differentiate a stock sale, or “merger,” from an asset sale, but more common usage of “acquisition” is functionally synonymous with “merger” but connotes that the survivor has substantially more power or control than the target. 
Capitol Lien can assist with filing and retrieving public records regarding mergers and similar transactions.
When an individual does business, the law considers he or she a “sole proprietor.” Sometimes a business or organization grows beyond one individual, and there might be cause to consider forming an entity. Entities can provide for the division of ownership, division of profits, formalization of governance, insulation from liability, and some preparation for continuation of business, all depending on entity type and certain choices and conduct as an entity.
Common entity types include general partnership, limited partnership, limited liability partnership, limited liability limited partnership, corporation, and limited liability company. Each is briefly introduced below. 
general partnership (GP) is often referred to merely as a “partnership,” though it is helpful – and more precise – to call it a general partnership. General partnerships are the oldest form of business organizations. To form a general partnership, nothing more is required than that two or more persons agree to carry on business together; however, there are potential advantages to formalization of the partnership agreement and registration of the partnership. Typically, in a general partnership, management, profits, and rights to partnership assets are split equally among the partners, and there is no insulation of partners from the partnership’s liability. A limited partnership (LP) can involve partners that are “limited” as distinguished from “general,” though there must always be at least one of each, a general partner and a limited partner. Formal documentation and registration in the appropriate office are necessary to formalize the formation of a limited partnership. In a limited partnership, there can be distinctions between the management participation, division of profits, and rights in partnership assets as between general partners and limited partners. Typically, though general partners are exposed to liability for partnership obligations, limited partners are not.
A limited liability partnership (LLP) is a general partnership that has completed a formal election to insulate partners from liability for partnership obligations. Likewise, a limited liability limited partnership (LLLP) is a limited partnership that has completed a similar formal election. The formal election involves preparing, signing, and filing specific documents, and there can be consequences – including that the election is ineffective – even for relatively minor errors; consider consulting an attorney for more information on this point.
A corporation (Corp. or Inc.) is formed by the filing of articles of incorporation. A corporation is significantly different than a partnership insofar as its existence is entirely separate from anyone else; a partnership requires partners, but not so for a corporation. For a corporation, the division of ownership, division of profits, and formalization of governance all depend on the formative document (usually articles of incorporation) and other governing documents (usually including bylaws). There are standard rules provided in state statutes, but there are myriad combinations and permutations possible by agreement. Typically, shareholders are insulated from liability – beyond risking whatever amount they invested to purchase shares.
A limited liability company (LLC) is a formed by the filing of articles of organization. A limited liability company is somewhat like a hybrid, having some similarities to a corporation and some similarities to a partnership. For a limited liability, the division of ownership, division of profits, and formalization of governance all depend on the formative document (usually articles of organization) and other governing documents (usually including a member control agreement and an operating agreement). As with corporations, there are standard rules provided in state statutes, but there are myriad combinations and permutations possible by agreement. Typically, members are insulated from liability – beyond risking whatever amount they invested to purchase membership interests.
Note that, while the formation and structure of an entity has some effect on issues like insulation from liability, conduct also has some effect. The behavior of owners and management can affect whether the structure has a “typical” effect; forming an entity is an event, but behaving as an entity is a process.
Also note that there are important considerations and requirements regarding taxation of entities and the tax consequences of particular structures, choices, and conduct that are beyond the scope of this article. Consider seeking advice from a qualified professional regarding the tax-related aspects of entities.
Tennessee- Bill to Combat Fraudulent Liens
Proposed Senate Bill 726 would allow public officials to remove liens fraudulently filed with the Division of Business Services without a court order. The Tennessee Secretary of State's office began working with the Administration Office of the Courts on the bill after an investigation led to a 320 count indictment and ten arrests.
Mississippi- Legislation Amends Requirements for Conversion Filings.
Mississippi- Corporation and LLC Annual Reports due by April 15th.
Hawaii- Business Entity Annual Reports due March 31st for entities with anniversaries in January through March.
Nebraska- Biennial Reports due by April 1st.


State & Federal Holidays
March 27th
Prince Jonah Kuhio Day
March 27th
Seward's Day
March 31st
Cesar Chavez Day
April 14th
Good Friday
Connecticut, Delaware, Hawaii, Indiana, Kentucky, Louisiana, New Jersey, North Carolina, North Dakota, Tennessee, Texas
April 17th
Emancipation Day
District of Columbia
April 17th
Patriot's Day
Maine, Massachusetts
April 24th
Confederate Memorial Day
Alabama, Georgia, Mississippi
April 28th
Arbor Day
Individuals, that is, human beings, are what the law calls “natural persons.” A natural person’s full name, as given at birth or as later legally changed, is the individual’s true name. Some entities, like corporations and limited liability companies, are formed by the filing of articles of incorporation or articles of organization with an appropriate filing office. The true name of such an entity is whatever name is specified in the filed formative document. Some entities can be formed other than by filing “articles” with any particular office: a general partnership, for example. The true name of a general partnership includes the full name of each partner. There are still further rules for determining the true name of other entities or organizations. 
Sometimes it is useful to use a name other than one’s true name. In that case, one can assume a different name, an assumed name, also sometimes called a “DBA” because one is “doing business as” the assumed name. However, there are requirements for, and limitations on, assumed names. 
In some jurisdictions, including Minnesota, one cannot do business under a name other than one’s true name without registering an assumed name. There are penalties for noncompliance with this requirement, and one could be exposed to claims if somebody else already has rights in a particular name. 
Generally, a new assumed name must be distinguishable from all existing assumed names in the particular jurisdiction. Some characteristics of an assumed name may be “standardized,” also, meaning that “and” and “&” may be considered to be the same and “ViZionarY” and “Vizionary” may be considered to be the same. It is prudent to search for existing assumed names before deciding on a new assumed name.
Also, one cannot use an assumed name that includes a designation as an entity of a type other than what one really is. For example, Murphy Washington could not assume “M. W. Corporation,” and XYZ Corp. could not assume “XYZ Partnership.” 
And while successfully registering an assumed name satisfies a requirement to do so before doing business under that name, it does little more. Specifically, though it would prevent somebody else from registering that assumed name in the same jurisdiction, it does not prevent others from using that name or from registering that name in another jurisdiction. There are legal protections available for trademarks and service marks, and there may be legal protections available to prevent certain other uses of names; consider consulting an attorney for more information on this point. 
Capitol Lien can assist with determining true names, checking the availability of new assumed names, registering assumed names, and filing amendments involving assumed names. 
An apostille is a formal certification by a competent authority of the authenticity of the origin of a qualifying document. An apostille facilitates the acceptance of the qualifying document by a foreign authority.
For example, one might obtain a birth, marriage, or death certificate from a U.S. state and also obtain an apostille to satisfy a governmental entity outside the U.S. of the authenticity of the document.
An apostille may be produced on the authenticated document or may be attached to the authenticated document. The official text is comprised of ten standard items of information and is contained within a square stamp or form. 
The identification of the competent authority begins by understanding the source of the document to be authenticated. Generally: (1) a document produced by an instrumentality of a U.S. state can be authenticated by that state’s Secretary of State or a Deputy/Assistant Secretary of State; (2) a document produced by a U.S. federal court can be authenticated by the Clerk or a Deputy Clerk of that court; and (3) a document produced by an instrumentality of the U.S. federal government can be authenticated by the U.S. Department of State. 
An apostille supports the authenticity of the signature and seal (if applicable) on a document but is not evidence of the content of the document; it does not add any official authority to a document, but simply authenticates the document’s origin. 
Apostilles are only applied to “public documents.” Birth, marriage, and death certificates are public documents, as are judgments and divorce decrees, as well as entity organizational documents emanating from the register maintained by an appropriate filing office (e.g., in Minnesota, the Office of the Secretary of State). Academic diplomas and transcripts from public institutions are public documents. Academic diplomas and transcripts from private institutions are not public documents but can be supplemented with an official certification that is a public document, and the certification can be authenticated via an apostille. 
Most, but not all, countries recognize the effect of apostilles, but it is advisable to check with the foreign authority to which you intend to transmit a document before incurring the burden of obtaining the apostille.
Complications with Multiple Secured Parties: Part 3- Risks
Again, most people do not appreciate the potential complications involved when a search reveals multiple secured parties on a single financing statement. See the first two parts of this series regarding the confusion arising when terminations, amendments, and continuations are filed with respect to financing statements with multiple secured parties. This part concerns the risks or potential consequences that flow from that confusion.
Let’s begin with an easy example.
  • SP-1 filed a financing statement in 2014 covering accounts, equipment, general intangibles, and inventory.
  • SP-1 authorized the filing of an amendment in 2015, and the amendment was filed, indicating an assignment by SP-1 to SP-2 of the interest in inventory.
  • In 2016, SP-3 paid SP-2 in full and filed its own financing statement covering accounts, equipment, general intangibles, and inventory, and SP-2 provided a termination of the 2014 financing statement.
  • SP-3 obtains a confirming UCC search, and the report shows only SP-3’s recent financing statement along with the 2014 financing statement, 2015 assignment, and 2016 termination.
Does SP-3 conclude that it is first-to- file with respect to accounts, equipment, general intangibles, and inventory? It should not, because the 2016 termination by SP-2 only affects SP2’s interest unless there is evidence that SP-1 also authorized the 2016 termination. Remember: “a record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record.” (§ 9510(b).)
The risk illustrated by this example is that a secured party retained some interest that was not resolved by a termination provided by another secured party. Relying solely on a search report – showing initial filing by SP-1, assignment to SP-2, and termination by SP-2 – one could conclude that the entire interest memorialized in the financing statement was resolved. But that would be a mistake, because examination of the underlying records – the initial financing statement, assignment, and termination – would reveal that SP-1’s interest in accounts, equipment, and general intangibles remains unresolved.
There are myriad combinations and permutations of records that comprise financing statements, and neither a search report alone nor a superficial review of the underlying records will reliably reveal the various record interests of various secured parties. And the risks of misinterpretation or of not inquiring deeply enough are particularly prevalent where there are multiple secured parties on a single financing statement. Risks include, among others, that an assignment affected less than assignor’s entire interest in all collateral, that an amendment (e.g., a deletion or “release” of particular collateral) affected less than all secured parties’ interests in that collateral, or that a termination ended less than all secured parties’ interests under the financing statement.
So, especially when one encounters multiple secured parties on a single financing statement, one should examine all records that comprise the financing statement to determine the status and interest, if any, of each secured party of record. (See Official Comment 2 to § 9511.) Sometimes, in fact, the inquiry might go even further than that….
Complications with Multiple Secured Parties: Part 2- Amendments
Again, most people do not appreciate the potential complications involved when a search reveals multiple secured parties on a single financing statement.
In the first part of this series, we discussed the potential for confusion to arise when a new secured party is added but the interest, if any, of the “old” secured party is not unambiguously ended. Consequently, an “old” secured party can remain a secured party of record; and remember: a careful searcher should seek to resolve the interest of every secured party of record. In this part, let’s discuss amendments other than terminations.
An amendment authorized by one secured party does not necessarily affect the rights of another secured party on the same financing statement. See § 9510(b). If SP-1 files an amendment without the concurrence of SP2, the amendment affects only the rights of SP-1. Presumably, the “other” secured party, SP-2, would be quick to ratify any amendment that adds collateral, adds a debtor, or otherwise increases its rights, but SP-2 would be just as quick to deny any amendment that purports to delete collateral, delete a debtor, or otherwise decreases its rights.
For example, consider that there are two secured parties listed for a financing statement, and one of them files an amendment. The amendment only affects the rights of any secured party that authorized the amendment. The secured party that filed the amendment almost certainly authorized it – that seems apparent from the fact that the secured party did file an amendment – but the other secured party’s authorization is not apparent from the filed amendment itself.
In this context, there are three alternatives to bind the “other” secured party. First, one could obtain evidence that the other secured party, SP-1, no longer actually has an interest, so SP-2’s amendment is sufficient. Second, one could obtain evidence that SP-1 is bound by the actions of SP-2, thereby making SP-2’s amendment binding on SP-1. Third, one could obtain authorization to file an amendment on SP-1’s behalf.
Again, any time there are multiple secured parties indicated with respect to a financing statement, one should satisfy oneself either (a) that all the secured parties have authorized the amendment, or (b) that all the “live” secured parties have authorized the amendment and there is adequate evidence that the other secured parties have either released, waived, or otherwise lost their rights with respect to the financing statement OR are bound by whatever amendments have been filed.
Notice that there has been no mention of continuation? Well, like other amendments, a continuation only affects the rights of a secured party that authorizes the filing. However, if there are multiple secured parties and one files a continuation, it is a virtual certainty that any other secured party would ratify or adopt the continuation, to protect its interest, if it still has one. Practically, it is exceedingly rare to see multiple concurrent continuations, though it would be the best practice for each secured party to file its own continuation.
More next time on the risks and consequences associated with the confusion from multiple secured parties on a single financing statement.
Complications with Multiple Secured Parties: Part 1- Terminations
Most people do not appreciate the potential complications involved when a search reveals multiple secured parties on a single financing statement.
Here is part of the cause of the confusion: the filing office has a serious concern about omitting pertinent data, and their system is designed to add information readily but to remove information only in very specific circumstances. In Minnesota, at least, applicable rules provide that:
1. An assignment adds the assignee as a secured party but does not delete the assignor as a secured party. (See Minn. R. 8280.0220)
2. An amendment to change a secured party’s name adds a “new” secured party name but does not delete the “old” secured party name. (See Minn. R. 8280.0210(A)(3).)
The problem, then, is that a UCC search report may show multiple secured parties while the underlying records could reveal that one or more of the apparent secured parties is not actually still involved. Official Comment 2 to § 9511 astutely states that “all effective records that comprise a financing statement must be examined to determine the person or persons that have the status of secured party of record.” True!
If a search reveals multiple secured parties with respect to a financing statement, and the goal is to resolve that financing statement, one can pursue one of two approaches. One can analyze all the records affecting the financing statement, attempt to compile evidence to exclude one or more antiquated secured parties, and obtain terminations from each secured party that has not been definitively excluded. Alternatively, one can seek to obtain a termination statement from every listed secured party.
"If one of several secured parties of record files a termination statement, [its effect] applies only with respect to the rights of the person who authorized the filing of the termination statement… The financing statement remains effective with respect to the rights of the others.” Official Comment 5 to § 9513.
The filing office is not the arbiter concerning who should be a secured party of record; they will list any secured party that has not unambiguously been relieved of that role. To be certain that the interests of all prior secured parties are resolved, one must obtain a termination from each and every secured party of record OR otherwise collect evidence to establish convincingly that the interest of each apparent secured party was otherwise ended. To resolve the interest of a secured party revealed in a search report but which is not subject to a UCCform termination from that secured party, one might chose to rely on an authenticated statement from the apparent secured party that the one of the following three things is true.
First, the secured party could state that its entire interest memorialized in the financing statement was transferred to another named secured party of record with respect to that financing statement. For example: “SP-1’s entire interest in collateral memorialized in financing statement [filing no.] was transferred to SP-2 on [date].” Then, so long as one has a termination statement from SP-2 dated after the date SP-1 transferred its interest, one could conclude that that financing statement is resolved. Theeffect of this first type of statement is to establish that SP-1 no longer claims any interest.
NOTE: The implication of a UCC-3 amendment indicating an assignment in Field 3 and completing Fields 7 and 9 but not Field 8 should be that the assignment is not a partial assignment. Logically, an assignment that is “not partial” must be “full,” but the assignor would still remain as a secured party of record absent a separate amendment indicating a party information change in Field 5 and identifying the secured party to be deleted.
Second, the secured party could agree to be bound by the “new” secured party’s termination, probably at the same time denying that the earlier secured party still has any interest. For example: “SP-1 cannot provide a termination to financing statement [filing no.] because it transferred its entire interest to SP-2. SP-1 agrees to be bound by any termination provided by SP-2.” Then, so long as one has a termination statement from SP-2, one could conclude that that financing statement is resolved. The effect of this second type of statement is to establish that SP-1 is bound by SP-2’s termination. Third, the secured party could authorize another (e.g., the debtor or the prospective new secured party) to file a termination of the secured party’s interest. For example: “SP-1 authorizes [named person] to terminate whatever interest SP-1 has, if any, under finance statement [filing no.].” Then, so long as the authorized person completes a termination, and SP-2 has separately provided its termination, one could conclude that that financing statement is resolved. The effect of this third type of statement is to delegate the authority to prepare and deliver a termination of SP-1’s interest.
NOTE: Only the third alternative will result in a “clean” UCC search result, because it authorizes the filing of a UCC-form termination. The two other alternatives involve evidence that the secured party no longer has an interest, but they do not necessarily provide a vehicle to cause a UCC-form termination to be filed on the secured party’s behalf, so the UCC search results may continue to reflect the potential interest.
So, a careful searcher should seek to resolve the interest of every secured party of record, not merely the “latest” secured party of record with respect to each financing statement, and there are multiple ways to accomplish this, though the decision regarding which method is acceptable for each searcher is left to that person’s determination.
More next time on amendments, etc.

Arizona - House Bill 2447

House Bill 2447 requires the Arizona Corporation Commission (ACC) to create and maintain a database for documents filed in the previous 90 days to be available online and business entities located in counties with more than 800,000 population (Maricopa and Pima) may submit the online information in lieu of publication.

California - Articles of Incorporation Amended

The Articles of Incorporation of a General Stock Corporation has been reformatted to include tips and clarification for filing.

Florida - Senate Bill 1104

Senate Bill 1104 permits a financial institution authorized by state or federal law to designate with the Department of State a place or registered agent as the sole location to receive service of process.  If a financial institution has no registered agent, service may be made to any officer, director or business agent at its principal place of business or any other branch, office or place of business in Florida.

New York - County Clerk Record Searches

Effective January 1, 2017, the search fee will increase from $5.00 to $10.00.

Pennsylvania - House Bill 1398

House Bill 1398 amends Title 15 (Corporations and Unincorporated Associations) and modernizes the law on limited liability companies, limited partnerships, general partnerships and limited liability partnerships. Among other things, LLCs and LLPs must file a certificate of termination to terminate existence, and benefit companies may be formed as LLCs.

  Annual Report Due Dates

January 1 (Biennial)


Domestic: Corporation

Foreign: Corporation

Domestic: Limited Liability Company

Foreign: Limited Liability Company Domestic: Limited Partnership

Foreign: Limited Partnership

 State & Federal Holidays

January 2

New Year's Day

All States Closed

Capitol Lien Offices Closed

January 16 Martin Luther King Jr. Day

All States Closed

Capitol Lien Offices Closed

“Lapsed” or “Unlapsed,” and Perhaps “Active” or “Inactive,” but not “Terminated.”
The UCC’s recordkeeping requirement for filing offices (e.g., state Secretaries of State) is that the filing office must maintain records until at least one year after a financing statement would lapse. See § 9522. Lapse occurs, typically, on the five-year anniversary of the initial filing, unless, within the appropriate window of opportunity, a continuation statement is filed. See § 9-515(c).
Note that there are different periods applicable when public-finance transactions, manufactured-home transactions, transmitting utilities, or mortgages as fixture financing statements are involved. Seek additional information and guidance in any of these special cases. The remainder of this discussion presumes that none of these special cases applies.
One could imagine dividing all financing statements into three groups: “unlapsed,” “lapsed one year or less,” and “lapsed more than one year.” Using just two simple groups, “unlapsed” and “lapsed,” would not provide enough differentiation to allow the filing office to follow the rule to keep financing statements that are “unlapsed” or “lapsed one year or less.”
In Minnesota, financing statements that are unlapsed or lapsed one year or less are labeled “active.” See Minn. R. 8282.0150 D. In Minnesota, active records must be maintained, but inactive records may be removed from the database. For a searcher, this means that a search might include “inactive” records that have not yet been removed. Other states use the term “active” differently. For example, in Delaware and Texas, financing statements are “active” until they have been removed from the database. For a searcher, this means that a search would not include “inactive” records, because they would have been removed from the database. In any case, a label of “active” or “inactive,” though useful for the filing office, is not directly relevant to a user of the UCC filing databases. In Minnesota, anyway, a searcher can ignore “inactive” records.
So, each financing statement is either “lapsed” or “unlapsed,” which merely tells us whether it has gone more than five years without being continued. Consider this “lapse status.” And, in some states, financing statements are “active” or “inactive,” which is merely a label for the filing office’s administration of its database. Consider this “activity status.” For both of these statuses, there is an objective determination that can be made by the filing office. They know whether a financing statement has lapsed because it depends solely on the calendar, and they know whether it is “active” on “inactive” because it is solely a label in their database.
Notice that “terminated” is not a label we have encountered. “Termination” does not affect the status: “active” vs. “inactive” or “unlapsed” vs. “lapsed.” This is because the effect of a termination statement cannot be objectively determined by the filing office. Why not? Like an initial financing statement or an amendment, a termination is only effective to the extent that it is filed by a person entitled to file it. See §§ 9510 & 9509. The filing office is not the arbiter on whether a termination is authorized. Consequently, though the filing office will include a termination in the database, the filing office will not change the status of a financing statement, whether or not it has been “terminated.”

The end of 2016 is fast approaching! In addition to the friends, family, food & gifts, make sure to successfully wrap-up all of your compliance tasks. We would like to help with the following reminders:

Business Licenses

Obtain all appropriate business licenses & keep note of their renewal dates. If your clients have expanded or changed their business in the past year, you might need new licenses.

Foreign Qualifications

Are you or your clients planning to do business outside of the state the organization is formed in? If so, you need to register. This is referred to as, “foreign qualification.” If operating in a state without having foreign qualified, that could carry fines & penalties into the new year.

Annual Reports

For your own business or those of your clients, make sure the annual renewal/report is filed so the company isn’t administratively dissolved.

Dissolutions & Withdrawls

Properly dissolve or withdraw from states where operations have ceased. This will avoid having to pay potential taxes in that jurisdiction in the next year.

Corporate Amendment Filings

Be aware of any company changes this year, such as a change in business name or a new address, a corporate amendment will need to be filed to keep the business records up to date.

Update UCCs

Review loan files to capture any changes that need to be made to UCC financing statements. Be aware of any address or name changes of a debtor this year.

 State & Federal Holidays

December 23

Christmas Eve (observed)

Arkansas, Illinois, Kentucky, Louisiana, Michigan, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, Wisconsin

December 26

Christmas Day (observed)

All States & Capitol Lien Offices Closed
December 27 Day After Christmas (observed) Alabama, Florida, Georgia, Kansas, Kentucky, Louisiana, Maine, New Mexico, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wyoming
December 30 New Year's Eve (observed) Kentucky, Louisiana, Michigan, Mississippi, Tennessee, Texas, West Virginia, Wisconsin, Wyoming

January 2

New Year's Day (observed)

All States & Capitol Lien Offices Closed

Post Lien Recommended Steps
Conducting a Post Lien Search is of the greatest importance for double checking to make sure the filing is on record and indexed correctly.
What is it?
Search of filing office's UCC records after your UCC has been recorded.
Why do it?
1.Confirms states' index is correct
2. Verifies lien position relative to other creditors
3. Closes gap between pre-funding UCC search and your UCC filing, if performed

The three types of Post Lien Searches often performed:
Certified Search
  • Exact legal name- state standard search logic
  • Unperfected lien/seriously misleading if doesnt show up
Plain Search
  • Can reveal name variations
Filing Number Verification
  • Search on UCC filing number only to see how it's indexed, not a search on the debtor name 

Related Info
UCC Services
Effortlessly search for UCCs, retrieve copies and submit UCCs for filing. (Read More)
Court Research
Request your widespread, multi-jurisdictional searches through Capitol Lien. (Read More)
Real Estate Research
Capitol Lien retrieves and verifies property information to provide the highest level of integrity. (Read More)

Why allow a PMSI to disturb the relatively straightforward order-of- filing priority scheme? There are at least two reasons: facilitating seller financing and limiting the power of existing secured parties.
Sometimes a seller of goods is willing to provide financing to a buyer. Sometimes the seller’s financing is on better terms than the buyer’s line of credit with its traditional lender, or perhaps the buyer does not have a line of credit and the traditional lender cannot or will not extend additional credit to the buyer. If the seller were willing to provide the financing and step into line behind the traditional lender, whose perfected security interest would attach to the new goods, great! But if the seller expects or requires that it will get a first-priority security interest on the new goods – goods it is selling to the buyer – the transaction cannot be completed without the cooperation of the traditional lender; unless there was a special rule to enable a seller to “jump ahead."
Say neither the seller nor the existing lender/secured party is willing to finance a buyer; perhaps the buyer wants to add a new product line to complement existing lines, but the seller does not provide financing, and the existing lender views the idea as a change in business model that it does not support. Should the existing lender’s reluctance prevent the would-be buyer from pursuing the effort? No. If the buyer can find another lender who would provide financing, the new lender could satisfy the technical requirements to create a PMSI, enabling the buyer to proceed and limiting the effect of the existing lender’s refusal or inability to provide additional financing.
Note that it is common for loan documents and similar agreements to include restrictions on additional financing or further security interests. Though the PMSI rules allow for a seller or new lender to “jump ahead” in terms of priority, to do so might be a breach or event of default under existing agreements, so a would-be buyer must still be wary.
So, for some types of funding – of purchasemoney obligations – and for some types of collateral – purchasemoney collateral – one has the opportunity to satisfy the technical requirements and take advantage of an exception to the general rules of priority to acquire purchasemoney priority and a PMSI!
If a secured party has a perfected security interest in purchasemoney collateral, the secured party should be able to acquire purchasemoney priority – and take advantage of an exception to the general rules of priority – by satisfying the technical requirements of § 9-324. 
If the purchase-money collateral is consumer goods (see § 9102(a)(23)), perfection occurs even without filing (see § 9309(1)) and the PMSI priority begins at attachment of the security interest (see § 9-203(a)). Remember that, generally, the burden is on the secured party claiming a PMSI to establish the existence and extent of the PMSI (see § 9103(g)), and a filing can be useful to memorialize the facts of the transaction, even though filing is not required.
If the purchasemoney collateral is equipment or farm products other than livestock, a PMSI takes priority so long as it was perfected before or within 20 days after the debtor receives possession of the purchasemoney collateral. See § 9-324(a). 
If the purchasemoney collateral is inventory, there are two important differences. First, the security interest must be perfected before the debtor receives possession of the purchasemoney collateral; there is no 20-day grace period. See § 9-324(b)(1). Second, the secured party claiming the PMSI must send, and all secured parties with prior perfected security interests in inventory must receive, a qualifying notification before the debtor receives possession of the purchasemoney collateral. See § 9-324(b)(2)- (b)(4). An “inventory PMSI prenotification” must (1) state that the sender has or expects to have a PMSI in inventory, (2) identify the debtor, and (3) describe the inventory. The secured party claiming the PMSI should send the notification by some means that allows the creation of evidence of receipt by the competing secured parties – for example, certified mail return receipts.
Note that it is easy to overlook the limitation that an inventory PMSI prenotification is only effective for five years. See § 9324(b)(3). Inventory itself probably turns over much faster than that, but an inventory financing relationship could last longer than that. Therefore, an inventory PMSI prenotification should be renewed on a schedule similar to continuation of a UCC financing statement.
If the purchasemoney collateral is livestock, a “livestock PMSI prenotification” is required. It is similar to an inventory PMSI prenotification, except that it must be received by the holders of competing security intertests in livestock within six months before the debtor receives possession of the purchasemoney collateral. See § 9324(d). 
Note that it is necessary to “refresh” a livestock PMSI prenotification at least every six months, due to the small window for notification, if the debtor is continuing to receive possession of purchasemoney collateral.
If the purchasemoney collateral is software, the special priority rule applies only if the software is acquired or used in goods that are also purchasemoney collateral. See § 9324(e). 
Why the special treatment of PMSIs? More on that next time, in PMSIs – Part 3.3

November 2016

November 8 - Election Day

November 11 - Veterans Day
ALL States

November 24 - Thanksgiving
ALL States

November 25 - Day after Thanksgiving* 
*Observance Name varies by Jurisdiction

Under UCC Article 9, the general rules for determining security interest priority are (1) that perfected security interests have priority over unperfected security interests, and (2) that perfected security interests have priority according to their respective times of filing or perfection.  See § 9‑322(a).  That is why we pay so much attention to the chronology of a UCC search report.  One exception to the general rules involves purchase‑money security interests, or PMSIs.
A “purchase‑money obligation” is an obligation incurred for some or all of the price ofcollateral, so long as the funding is, in fact, used to enable the debtor to acquire rights in the collateral.  See § 9‑103(a)(2).  And “purchase‑money collateral” is goods or softwarethat secure a purchase-money obligation.
Note that a PMSI must involve goods – equipment, inventory, farm products, or consumer goods – or software.  See §§ 9‑102(a)(44), -102(a)(33), -102(a)(76).  One cannot have a UCCPMSI in accounts, chattel paper, general intangibles, instruments, or investment property, or in anything else that is not goods or software.
Under the first part of the general rules stated above, a perfected security interest will have priority over an unperfected security interest.  Therefore, to take advantage of the exception to the general rules and achieve purchase‑money priority, one must perfect the security interest.  For equipment, inventory, farm products, and software, which are eligible for a PMSI claim, a security interest can – and must – be perfected by filing a financing statement.  See § 9‑310.  For consumer goods, filing is advisable, both to provide protection in the event of a further sale of the consumer goods to a second buyer (see § 9-320(b)), and in case the secured party cannot establish all the requisites for a PMSI but still desires to have a perfected security interest (see § 9‑309(1)).
Note that, generally, the burden is on the secured party claiming a PMSI to establish the existence and extent of the PMSI.  See § 9‑103(g).
So, if one has a purchase‑money obligation and purchase‑money collateral, one has the opportunity to acquire a purchase‑money security interest, or PMSI.  How?  More on that next time, in PMSIs – Part 2.

To improve access to the courts and to facilitate the electronic filing of court documents, a new Minnesota Statute became effective not long ago, stating that, unless specifically required by a court rule, a document need not be notarized to be filed with a Minnesota state court.  In other words, there is no general requirement for notarization, and any historical practice or common usage that implies a notarization requirement, such as calling a document an “affidavit,” does not actually require notarization.

Instead, a document that requires “verification upon oath or affirmation” can achieve that characteristic with the inclusion of simple "perjury language.”   The text suggested by the statute is “I declare under penalty of perjury that everything I have said in this document is true and correct.”  Minn. Stat. § 358.116.  That text must appear immediately above the signature, and the document must, somewhere, include the date of signature and the county and state where it was signed.


* * *

I declare under penalty of perjury that everything I have said in this document is true and correct.

Signed [DATE] in [COUNTY], [STATE].  _____________________________

Importantly, this change only directly affects the requirements for filing a document with a Minnesota state court.  It does not directly affect any documents that must be verified to satisfy a requirement other than a Minnesota state court rule, and it does not directly affect any document that must be acknowledged as opposed to verified.  (For example, under Minn. Stat. § 523.23, subd. 3, a Minnesota short form power of attorney must be acknowledged, and under Minn. Stat. § 507.24, to be recordable, a real estate conveyance must be acknowledged.)

So, for documents to be filed in a Minnesota state court, many documents that had historically included notarization can avoid the involvement of a notary public and now use “perjury language” instead.  However, there are numerous other requirements for notarization, such as in the acknowledgment of real estate documents, that are unaffected by the recent statutory change.


Start by establishing a concentration baseline through peer analysis to know where you stand.  Be sure to include acquisition development and construction loans as well if applicable.  Next, establish policies and procedures for management and members of the board.  Like any regulatory compliance initiatives, a strategic plan and approach is critical with information being shared top-down throughout the organization.
Assessing the market to understand what you’re operating in in terms of a relative risk profile would be best.  For management practices, rank each concentration bucket by its risk.  The better you understand your market sectors in regards to economic, job generation, and when real estate is up or down the better you can relay explanations to your regulators.  If over the 100% rule just know that brings enhanced regulatory scrutiny so your understanding and solid documentation can help.
A good best practice would be to create a Risk Appetite Statement for your concentrations.  Make sure management and the board understands the risk appetite and that it is appropriately reflected in the meeting minutes.  Regulators want to know scenario and stress testing tied to ALLL and capital is continuously being conducted by your bank.  Project past to substandard based on rate change tests.  Conduct stress test changes in cap rates.  What is the effect on valuation?  If default what losses?  Also, try to diversify your collateral.
Concentration Reports can and should be made by asset category.  If your bank’s caps are being exceeded then action must be taken immediately.  In addition to dollar amounts it’s wise to have an understanding of the trends in each of your asset groups (ie occupancy, rents, who is entering/ exiting).  Set house-level limits vs. legal-level limits with a buffer to ensure you achieve a sound position.  If able, additional levels of capital should be recognized and set aside.
It is recommended that you review the SR 07-1 Guidance on Concentrations in Commercial Real Estate along with taking some of the suggested actions above



  • Growth is slower than anticipated

  • The labor market is steady

  • Job growth performing well regardless of news reports

Apartment Market

  • Vacancy rates are falling

  • The data says construction is outpacing demand

  • There are record high rents across the country & not slowing down

  • There are far more “A” properties being built than “B/C” properties

  • Strong markets include Atlanta, Seattle, Bay Area, Washington D.C., Houston

Office Market

  • Not as robust as it should be, but still performing well

  • There has been a decline in vacancies

  • Rent growth is strong

  • Renewed attraction to urban areas

  • Companies are bringing suburb offices back to the cities


  • Multi-speed recovery

  • Internet making the retail brick & mortar market hard

  • Discount stores are performing well (T.J. Maxx, Trader Joes)


  • Improving

  • E-commerce is booming

  • Rent is growing

  • Distribution markets are hot, hot right now

Capital Markets

  • Outstanding debt growth

  • Commercial banking very strong

  • More regulation than ever before

  • Now very global including China, Japan, etc.

When Filing

IACA Forms: The following PDF Forms are provided to assist with your UCC processing.

UCC1 – Financing Statement

UCC1Ad – Financing Statement Addendum

UCC1AP – Financing Statement Additional Party

UCC3 – Financing Statement Amendment

UCC3Ad – Financing Statement Amendment Addendum

UCC 3AP – Financing Statement Amendment Additional

UCC5 – Information Statement

UCC11 – Information Request

Tips For Filing:

  • Verify proper filing fee or use an agent that would know
  • Use the correct form
  • Fill out the form completely
  • Make sure you are filing in the appropriate jurisdiction

Related Info

Registered Agent Services

Capitol Lien is a leader in Registered Agent Services nationwide. (Read More)

Database Direct

Database Direct allows clients to perform name searches and obtain copies of UCCs and Tax Liens. (Read More)

Due Diligence Blog

Stay updated on the latest legislation and jurisdiction news on our blog. (Read More)


Colorado - Filing Fee

The fee for dissolving a Colorado entity decreases from $25.00 to $10.00, effective October 1, 2016.

Florida - Senate Bill 1104

Florida Senate Bill 1104 was signed into law by Florida Governor Rick Scott. The bill allows a financial institution authorized by state or federal law to designate with the Department of State a place or registered agent as the sole location to receive service of process. Service of Process may be made on any officer, director or business agent of the financial institution at its principal place of business, or at any other branch, office or place of business in the state, if a financial institution has no registered agent.

Iowa - Electronic Records

One million documents have been electronically filed in Iowa. Iowa Land Records serves all segments of the real estate industry, such as financial institutions, title companies, real estate attorneys and other government agencies. In addition to the electronic filing service, Iowa Land Records provides online access to nearly 16 million public records for all Iowa counties.

Washington D.C. - Apostille & Notary Certificates

The D.C. Government has changed the look of their Apostille and Notary Certificates. They are now blue and on watermark paper.

  Annual Report Due Dates

October 1


Domestic: Non-Profit Corporation

Foreign: Non-Profit Corporation

October 1    


Domestic: Limited Parnership

Foreign: Limited Partnership

 State & Federal Holidays

October 10

Columbus Day

Columbus DayAlabama, Alaska, Connecticut, District of Columbia, Georgia, Idaho, Illinois, Indiana, Maine, Maryland, Massachusetts, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Rhode Island, South Dakota, Utah, Virginia, West Virginia

October 18

Alaska Day


October 26

Nevada Day


Deleware - Senate Bill 276

Effective on August 1, 2016, Senate Bill 276 adds “statutory trust” to the definition of “person” for purposes of the Uniform Commercial Code.

Arizona - Senate Bill 1356

The bill requires both certified copies from the foreign jurisdiction and articles of amendment will be required if the corporation changes its name, duration, or domicile, or if anything on the original Application was inaccurate when filed. 

North Carolina - Senate Bill 482  

Recent Senate Bill 482 allows the conversion of a charitable or religious corporation to a LLC.

West Virginia - UCC Electronic Filings  

The West Virginia’s Secretary of State’s office will require all UCC financing statements be filed electronically effective August 1, 2016. A grace period to transition from paper to electronic will not be provided.

 State & Federal Holidays

September 5 All State & Capitol Lien Offices Closed Labor Day

Before You File

Before filing a UCC you will need to do the following to ensure that your filing is successfully filed:

1. Ensure you are filing on all proper debtors associated with the transaction

2. Verify proper legal name(s) and addresses

3. Run a UCC search on each debtor's legal name to make sure collateral is clear of any liens

Related Info

The Best way to determine the legal name of a corporate entity is to obtain a copy of it's charter documents, including amendments which could reveal any recorded name changes.

We can help you to obtain corporate records to ensure the proper legal name of a business. We provide corporate services every day in conjunction with UCC searches and filings for our clients.

Did you know?

When determining the proper individual debtor name on the financing statement, not all states are the same. Even though most states have adopted Alternative A following the 2013 revisions to the UCC statute, seven states (AK, CO, CT, DE, NH, OR, WY) to date have adopted Alternative B.

  • Alt. A states require the exact name as it appears on the driver's license
  • Alt. B states accept multiple ways to determine the proper legal name:
    • ​Driver's license, name under current law and surname and first name
    • Example: Robert B. Smith, Robert Bradley Smith, Robert Smith
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