Who s Your Party? LLCs, Corporations, Partnerships, Trusts & More Chicago Title February 2016 1
2 issues (1) Is it the same person? Tomika Investments case (2000) Sue Smith becoming Sue Jones or Sue Smith Jones (2) Can you find them in the Register of Deeds indexing system? GS 47 18 GS 47 20 GS 161 14.2 GS 161 22 GS 147 54.3(b) and (b1) 2
COMPETENT GRANTORS Individual (living) Unmarried (including divorced or widowed) Married Separated Minor Incompetent Decedent s Estate through Personal Representative Sole Proprietorship ( dba [doing business as]) Estate of future interest holder (through guardian ad litem) Corporation through its officer(s) Limited Liability Company (LLC) through its member(s)/manager(s) Partnership through its partner(s) General Limited Unincorporated Non Profit Association Trust or Trustee (Non Business Trust and Trustee in Deed of Trust/Foreclosure and Trustee in Bankruptcy [not debtor in possession] through trustee(s) Business Trust through trustee(s) or officer(s) 3
RED FLAGS A recent change in the state filings of the entity that adds or deletes parties with authority or a change in the trust instrument or partnership/llc agreement that attempts to do the same. Any transaction that involves conveyancing or mortgaging of Land by or to an officer of a corporation, partner of a partnership, member of an LLC or parties to a trust. Foreign Executions When Directors or other entity officials are not located in the United States or the corporate documents reveal the owners are not located in the United States. Any recent amendment to the corporate/organizational documents adding or deleting parties to the entity. Any variation in name, no matter how minor, in chain of title or the documentation submitted to support the chain of title. Any recent conveyance without corresponding financing. A single party has signed all resolutions and supporting document giving that same person authority to act on behalf of the entity. 4
www.secretary.state.nc.us/ Corps, LLCs, LPs Non Profits & Charities Notary Public Standards Minimum Standards for Indexing Real Property Instruments UCC s 5
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Non Profits By County 7
BANKS & LENDERS NC Commissioner of Banks: www.nccob.org HUD FHA Lender List: www.hud.gov/ll/code/llslcrit.html FDIC (for federal banks): https://www5.fdic.gov/idasp/main.asp U.S. Small Business Administration: www.sba.gov Comptroller of the Currency: www.occ.treas.gov National information Center: www.ffiec.gov/nicpubweb/nicweb/nichome.aspx 8
ENTITIES ALWAYS review the organizational documents for authority Articles for CORP, LLC, LP must be filed with Secretary of State (or equivalent) of their home state Annual Reports current officers/managers legal reliance current address good standing 9
ENTITIES (cont d) Property titled in the entity is not subject to claims of creditors or spouses of individual owners (though the individual s stock or partnership interest may be) Self Dealing is BAD! 10
ENTITIES: Name change, conversion, consolidation or merger (G.S. 55D 26) Certificate issued by the NC Secretary of State (or entity s resident state authority) MUST: Recite name change, merger, consolidation or conversion Be recorded in Register(s) of Deeds where property lies Former entity = Grantor New entity = Grantee 11
ENTITIES Dissolutions Title remains vested in entity For current transaction, either: Deeds must be consistent with winding up OR Entity must bring reports, fees, taxes current 12
CORPORATIONS (G.S. Ch. 55) Articles of Incorporation @ Secretary of State (resident state) Merger or name change G.S. 55D 26 Register of Deeds Secretary of State (resident state) 13
CORPORATIONS (cont d.) Mortgage, sale in ordinary course of business or sale leaving 25% of assets and income or revenues Board of Directors without shareholder approval All or substantially all requires shareholder approval G.S. 55 12 01 G.S. 55 12 02 14
Limited Liability Companies (LLCs) G.S. Ch. 57D Articles of Organization @ Secretary of State (resident state) Managers (title depends on Operating Agreement) Annual Report = legal reliance on authority of named persons Merger or name change G.S. 55D 26 Register of Deeds Secretary of State (resident state) 15
LLCs (cont d) Subject to Operating Agreement: Ordinary course of business: by a single manager or delegatee G.S. 57D 3 20 Transfer all or substantially all of the assets of the LLC: unanimous vote of all members G.S. 57D 3 03(3) 16
GENERAL PARTNERSHIP Partnership name OR individuals Association of 2 or more persons to carry on as co owners a business for profit G.S. 59 36 Tenants in Common? Joint tenants with right of survivorship? G.S. 59 37 Assumed Name Certificate @ Register of Deeds (proposed changes 2015) G.S. 59 84.1 & 66 68 17
GENERAL PARTNERSHIP (cont d) Not apparently for the carrying on in the usual way of the business of the partnership requires joinder of all general partners G.S. 59 39 & 59 40 18
LIMITED PARTNERSHIP Certificate of Limited Partnership @ Secretary of State G.S. 59 201, Ch. 55D Foreign LP in resident state G.S. 59 91 & G.S. 59 93 Limited partnership in name in NC Merger or name change G.S. 55D 26 Register of Deeds Secretary of State (resident state) 19
LIMITED PARTNERSHIP Powers regarding Real Property Apparently carrying on in the usual way the business of the partnership G.S. 59 39(a) Not apparently for the carrying on in the usual way of the business of the partnership requires joinder of all general partners G.S. 59 403(a) G.S. 59 39(b) & (c), G.S. 59 40 20
NONPROFIT CORPORATION Articles of Incorporation @ Secretary of State (resident state) Merger or name change G.S. 55D 26 Register of Deeds Secretary of State (resident state) 21
NONPROFIT CORPORATION (cont d) Board of Directors unless Articles or Bylaws require otherwise Sell, lease, exchange or dispose of in usual & regular course of activities Mortgage or encumber, whether or not in usual and regular course of its activities G.S. 55A 12 01 22
NONPROFIT CORPORATION (cont d) By members and directors, subject to Articles and Bylaws Sell, lease, exchange or dispose of other than in usual & regular course of activities G.S. 55A 12 02 Charitable or Religious organizations must give notice to NC Attorney General G.S. 55A 12 02(g) 23
TRUSTS Current trustees Purpose of trust still ongoing Passive vs. active trust Statute of Uses, GS 41 7 Special case: trustee and beneficiary of deed of trust are same Trust agreement for authority to deal with real property GS 36C 8 816(2), (8), (9), (10) GS 36C 10 1012 and 1013 (Certification of Trust) 24
TRUSTS (cont d) NO self dealing unless specifically authorized in trust, by beneficiaries or by court incl. mortgage on trust property for individual debt presumed conflict GS 36C 8 802 VOIDABLE 25
Trusts (cont d) Co trustees Trustee successors GS 36C 7 703 GS 36C 7 707 & 704 Judgments against beneficiaries of trust can attach to trust property if supplemental proceedings GS 1 315(4) 26
NAKED or BLIND TRUSTS G.S. 43 63 Grant to trustee only No beneficiary or specific trust identified No record instrument stating powers full power to convey or otherwise dispose of the real estate NOTE: If passive trust, converts to fee so spouse s and creditors potential interests must be addressed 27
BUSINESS TRUSTS G.S. 39 44 et seq. Memorandum of Trust required G.S. 39 46 Trustees sign conveyances if title in trustees names Officers sign conveyances if title in common name of Business Trust 28
VOLUNTARY ORGANIZATIONS (G.S. 39 24 et seq. now repealed) Title can be held by trustees or in common name Charitable, fraternal, religious or social organizations Conveyance must be authorized by resolution of the body duly constituted and held G.S. 39 24 29
CHURCHES & RELIGIOUS ORGANIZATIONS Entity type & name in which title held Title limitations in vesting instrument Reversions and restrictions 30
CHURCHES & RELIGIOUS ORGANIZATIONS (cont d) Types of organizations : Nonprofit corporation G.S. Chapter 55A Religious Societies, (bishops, ministers, other ecclesiastical officer or Trustees) G.S. Chapter 61 (prior) Voluntary organization G.S. 39 24 Uniform Unincorporated Nonprofit Association Act (other than trust or LLC) G.S. Chapter 59B ( Statement of Authority ) 31
CHURCHES & RELIGIOUS ORGANIZATIONS (cont d) Local church Organizational documents / requirements Approval by congregation and board Authorized persons Connectional churches Organizational requirements Due authorization and approval Web sites 32
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Tenancy in Common (TIC) Co ownership between two or more persons or entities, each owning a separate undivided interest in the land and each having a right to occupy the whole in common with the other co tenants IF STATE PERCENTAGES, MAKE SURE THEY ADD UP TO 100%!! 35