Alerts

Arizona House Bill 2447

Publication can be time-consuming and costly so it brings great joy to the masses when this requirement is removed or simplified!

Effective January 1, 2017, Arizona entities with a known place of business in the two most populous counties, Maricopa and Pima, are no longer required to publish in a newspaper. Instead, the Arizona Corporation Commission now posts the required publications within a new database on their website: http://ecorp.azcc.gov/ under “Public Notice”. There is no fee associated with the posting and it is automatic when applicable documents are approved for filing. Entities with businesses located in all other Arizona counties must still publish as they have in the past.

Post-Closing UCC Searches

Did you know that following the filing of your financing statement, there are key events that could put your perfection and priority at risk? Because there is always a gap between the through date of an initial UCC search and the filing date of your filing, it’s important to run a post-closing search to make sure another secured creditor didn’t beat you to the front of the line.

This search to reflect is also an opportunity to verify that your financing statement was indexed correctly by the filing office, which is crucial to the perfection of a security interest.

If a transaction also involves an interest in after-acquired collateral, you’ll want to do more than just one post-closing UCC search. In order to maintain perfection, secured parties need to search their debtor’s corporate records regularly. If an entity debtor files a name change amendment in the public record, secured parties have only months to amend their financing statement before they become at risk of losing priority in after-acquired collateral. The same risks apply if a debtor re-organizes in a different state. Setting up recurring searches to monitor the corporate records should be standard practice for asset based lenders and factors dealing with revolving assets.

Make a List. Check it Twice.

The Office of Foreign Assets Control (OFAC), part of the U.S. Treasury Department, administers and enforces the United States’ trade and economic sanctions programs. The objective is to prevent business activity which directly or indirectly finances terrorist, narcotics, or human trafficking activities. OFAC regulations apply to all U.S. citizens and permanent resident aliens, all persons and entities within the U.S. law and their foreign branches.

The regulations prohibit doing business with anyone included on the lists maintained by OFAC including (i) individuals and entities designated as “Specially Designated Nationals” (SDNs); and (ii) banned countries. The SDN List is updated regularly and can be searched via the U.S. Treasury’s website: https://sanctionssearch.ofac.treas.gov/

In order to ensure compliance, law firms and businesses should check the names of potential and existing customers against the SDN List on a regular basis. If a valid match is determined, OFAC should be contacted as required by law. There are many OFAC reporting and record keeping requirements with which to comply. Failure to do so can result in stiff penalties.

In addition to OFAC regulations, financial organizations are governed by other anti-money laundering laws. Under the Bank Secrecy Act, the USA Patriot Act, and related anti-money laundering laws, banks must develop and maintain risk-based anti-money laundering, customer due diligence, and customer identification programs. Banks must also screen customers against additional government lists and establish a suspicious activity monitoring process.

The Long and Short of it

It’s common to refer to status certificates as “Good Standings” across all 50 states, although their technical name does vary by jurisdiction. There may also be an option to obtain a long form certificate versus a regular certificate. Long Form Good Standing Certificates are, very simply, status certificates that also list the titles and file dates of all corporate documents on file for the entity. Copies do not accompany a Long Form and, if required, must be ordered separately. Of the 33 states that offer Long Forms, many only do so for domestic entities. While the additional information might be preferred to the limited information provided on the standard certificate, Long Forms often take several days to receive and the statutory fees are typically much higher than those for the standard certificate. For more information on what states offer the Long Form or for a proposal of fees, please contact Capitol Services at: info@capitolservices.com

News of the Weird: UCC Edition

Did you know that Georgia doesn’t have a central filing office? Pick your favorite county and your lien will be added to a central indexing system for searching purposes! Same goes for Louisiana parishes.

Did you know that Wyoming has a non-uniform ten-year effective period for their financing statements?

Did you know that Tennessee requires the filer pay a recordation tax in addition to their standard filing fees?

Did you know that Delaware will expedite your UCC filings with a one- hour turnaround for the cool cost of $1,000 in addition to their standard filing fees?

Did you know that South Dakota still requires the inclusion of social security numbers and federal tax IDs on their UCCs? But be careful! It’s illegal to include this information in other jurisdictions!

Did you know that Illinois requires the use of ten-point font on its financing statements?

Did you know that Delaware, New Jersey, North Dakota, West Virginia, Colorado, Mississippi, and Vermont no longer accept paper submissions of UCC filings? These states strictly e-file now.

Did you know that our online UCC Filing Manager remembers all of these oddities so that you don’t have to?

Top 5 UCC Filing Mistakes

5. Not checking the appropriate real estate boxes on fixture filings.
This is especially problematic in the jurisdictions of Louisiana, Georgia, Oklahoma, and D.C. where UCC filings commingle with fixture filings. If you don’t have the appropriate boxes checked and legal descriptions attached, your fixture filings may be indexed as UCC financing statements related to personal property.

4. Missing jurisdiction-specific requirements.
A handful of states require that you include specific language related to collateral or tax requirements and the national UCC form doesn’t prompt you to include this information. Omission, however, can lead to rejection by the filing office.

3. Using outdated forms.
The current national forms revised in 2011 are accepted in all jurisdictions with the exception of New York, while the previous forms are widely rejected. Some states have created their own jurisdiction-specific forms.

2. Filing in the wrong jurisdiction.
For the UCC novice, it’s easy to assume that the jurisdiction for filing is the central filing office in the state indicated in the debtor’s mailing address. The appropriate index for filing with respect to personal property, however, is the central filing office (or index) in the state where the debtor is located. A debtor who is an individual is ‘located’ where they reside while a debtor that is a registered entity is located in the state of organization.

1. Specifying a debtor name that includes additional information or a DBA name.
Additional verbiage beyond the legal name of the entity is liable to cause a hidden lien that would be deemed ineffective. Capitol Services, Inc., a Texas Corporation, would be an inappropriate presentation of a debtor name. Capitol Services, Inc. D/B/A Capitol Corporate Services would also be inappropriate. Keep box 1a limited to the legal name of the entity: Capitol Services, Inc.