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.
Published in Registered Agent
-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.
Published in Jurisdiction Updates
Friday, 06 April 2018 00:00

UCC Origination: Part II

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.

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

Published in UCC
Thursday, 05 April 2018 00:00

UCC Origination: Part I

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.

Published in UCC
Friday, 29 December 2017 00:00

File, Search & Grow with Database Direct

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: https://www.capitollien.com/services-overview/database-direct

Feel free to email This email address is being protected from spambots. You need JavaScript enabled to view it. with any system inquiries.
Published in Due Diligence
Monday, 13 November 2017 00:00

If the Debtor's Name Changes

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.
Published in UCC
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!
Published in Lending
Thursday, 06 April 2017 00:00

Vocabulary of Mergers & Acquisitions

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.
Published in Legal
Wednesday, 15 March 2017 00:00

DBAs & Assumed Names

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. 
Published in Due Diligence
Friday, 10 March 2017 00:00

The Real Deal with Apostilles

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.
Published in Due Diligence
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