THE NC CONNECTION North Carolina Insuring Entities or Who, Who, Who Resources Are You? Jane S. Barkley, Esq., Senior Commercial Title Attorney [email protected] CFPB/ALTA Best Practices Corporations have been called invtitle.com/cfpb/nc: CFPB and ALTA the most successful legal fiction. Best Practice articles, manuals, Ambrose Bierce said a solutions, and other resources. corporation was “An ingenious Events & Education device for obtaining individual profit without individual invtitle.com/events/nc: CLE/CPE credit responsibility.” From a title available through live and online courses. perspective, we don’t need to be corporate experts. We simply Articles & Newsletters need to confirm that the entity in invtitle.com/resources/nc: for a the chain of title is valid and in comprehensive directory of past good standing. newsletters, select Articles and Newsletters / Article Directory. In most states, the recording of corporations and limited liability Forms companies is available online through the Secretary (or states also require a current list invtitle.com/resources/nc: for a sometimes “Department”) of of officers and directors. It is a complete list of forms, select the Forms State. In North Carolina, both good idea to check the officers category. domestic and foreign entities are and directors as well. If your Tools listed at https:// documents are not being signed www.secretary.state.nc.us/ by one of those persons, a invtitle.com/resources/nc: for a search/index/corp. An entity resolution or corporate affidavit complete list of frequently-used tools, “chain of title” showing of authority should be required. view the tools box on the right. origination, domestication, (Continued on page 2) mergers, acquisitions, and so on iTracs are usually listed under the Insuring Entities... 1-3, 5-6 invtitle.com/itracs: proactively entity name. manage your accounts and resolve NC Fun Facts 3 Keep in mind that the name critical issues such as disbursement Claims Corner errors and account irregularities. must be exact because anything 6-8 “distinguishable on the record” is Are Your Trust 8-9 EFLITE sufficient to create a separate Accounts entity. “Exact Corporation” and invtitle.com/eflite: prepare and “Exxact Corporation” are not the Protected? submit forms online. same. This can require you to Branch Profile 10 VIP search for corporate changes or invtitle.com/vip: business solutions and require correction deeds. Most Investors Trust 10 purchasing power 1 | NC Connection | Sept 2015 We Know North Carolina invtitle.com THE NC CONNECTION Insuring Entities... cont. from page 1 This article will provide the title “effective against lien creditors If the corporation has been insurer’s perspective to insuring or purchasers for a valuable dissolved either voluntarily or real estate transactions consideration from the entity administratively by the Secretary involving corporations, limited formerly owning the property, of State, it does have the right to liability companies, and only from the time of registration “wrap up” its business affairs partnerships. of a certificate …in the county which would include selling off where the land lies.” NCGS § assets and real property. NCGS CORPORATIONS 47-18.1(a). § 55-14-05. We can insure those transactions, but we must A corporation is a legal entity The following documents have sufficient evidence of the able to purchase, hold, establish the authority of the nature of the corporate status. mortgage, lease, exchange, and corporation to conduct the We suggest that you include a sell real estate. The board of proposed transaction and statement in the deed that directors of a North Carolina should be reviewed prior to explains that the transfer is corporation may act without closing: being made for the purposes of approval of its shareholders if winding up the corporation the transaction is in the usual Articles of Incorporation affairs and complies with NCGS and regular course of business. certified by the Secretary of § 55-14-05. If you have a NCGS § 55-12-01. If such sale, State. question about a corporation lease, or exchange is not in the status, contact one of our title ordinary course of business, the Bylaws set forth the attorneys. transaction will need approval of procedures for the the corporation’s board of shareholders and/or directors If the corporate charter has directors and shareholders. to follow to complete the been suspended for failure to NCGS § 55-12-02. Such transaction. file tax returns or pay taxes approval is usually evidenced by under Chapter 105, “Any act a shareholder resolution. Certificate of Good Standing or performed or attempted to be Existence from the State of performed during the period of Foreign corporations have the incorporation. suspension is invalid and of no same rights to convey property effect”. NCGS § 105-230(b). (Continued on page 3) as allowed for domestic Resolution authorizing the corporations. NCGS § 55-15- proposed transaction. 05. They do not have to qualify to do business solely to hold title The certificate of existence “may or convey real property. Holding be relied upon as conclusive title to property is not transacting evidence that the domestic or business, and without more, foreign corporation is in would not require a certificate of existence or is authorized to authority from the Secretary of transact business State. in this State.” NCGS § 55-1-28(c). If a corporation, domestic, foreign, or nonprofit changes its name by amendment or merger, they must file a certificate of the change with the register of deeds of each county where they own real estate. NCGS § 55D-26. Upon merger, the real estate and other property of each corporation is vested in the surviving corporation by operation of law “without reversion or impairment”. NCGS § 55-11-06(a)(2). The transfer is 2 | NC Connection | Sept 2015 We Know North Carolina invtitle.com THE NC CONNECTION Insuring Entities... cont. from page 2 The general rule was that the name is accurate on all the the recorded power of attorney corporation would need to pay closing documents to avoid to the current transaction all taxes and fees, including claims in the future. documents. reinstatement fees, to be able to conduct business and complete It is important to use the correct LIMITED LIABILITY COMPANY a real estate transaction. NCGS notary acknowledgement for § 105-232(a). A recent North corporations. The corporate seal A limited liability company is Carolina Court of Appeals case, is no longer required. See North also a legal entity able to however, has reached a Carolina General Statutes purchase, receive, lease, or different conclusion concluding Chapter 10B for notary otherwise acquire, and own, that NCGS § 55-14-05 trumps requirements. NCGS § 10B-41. hold, improve, use, sell, convey, NCGS § 105-230(b) and that the mortgage, and exchange real revenue suspension does not A word about powers of estate. NCGS § 57D-2-03. invalidate the transfer of attorney: we receive a lot of Unless otherwise stated in the property, if it was done for inquiries regarding the authority Articles of Organization or purposes of winding up. LE of a lender/corporation to Operating Agreement, a written Oceanfront, Inc., et al v Lands delegate by a power of attorney agreement or approval of all End of Emerald Isle Association, to another entity or person to members will be required to sell, Inc., COA14-287 (12/31/2014). sign documents, usually in transfer or otherwise dispose of If there is a sale involving a connection with a foreclosure or all or substantially all of the corporation under a revenue real estate owned (“REO”) assets of the limited liability suspension, you will need to get transaction. The powers of company prior to dissolution. the approval of your title attorney are usually recorded in NCGS § 57D-3-03. insurance underwriter. one county alone. The recording in one county is Unlike a corporation, the limited It is also essential that the allowed in North Carolina. A liability company is owned by corporation be in good standing corporation may convey an members instead of if it is the grantee of real interest in real property by shareholders. The authority to property. If it is dissolved, it instrument duly executed by an manage the affairs of the limited cannot take title and the rules of officer, manager, or agent by a liability company is vested in the winding up will not apply. signed and attested resolution of managers and it can be member Piedmont and Western the board of directors managed or manager managed. Investment Corp. v. authorizing the named parties to NCGS § 57D-3-20(d). All the Carnes-Miller Gear Co. 96 execute the documents of members are managers unless N.C.App. 105, 384 S.E.2d 687 conveyance. NCGS § 47-18.3. the operating agreement says (1989), cert. denied, 326 N.C. Most of these servicing otherwise. 49, 389 S.E.2d 93 (1990). We agreements will contain a list of cannot stress enough that we people authorized to sign. It is a (Continued on page 5) have to verify the corporate good practice to attach a copy of NC FUN FACTS Jockey’s Ridge Jockey's Ridge is found in the Outer Banks coastal region of NC and is the tallest natural sand dune in the Eastern US. It came into being about 7,000 years ago when sand was pushed onto the beaches by storms. On July 25, 1974, Jockey's Ridge was approved as a National Natural Landmark and approx. 152 acres were acquired in 1975 to create Jockey's Ridge State Park. One popular legend concerning the naming results from the practice of racing Spanish Mustangs which came from the ships wrecked offshore. Riders, or jockeys, used the flats at the base of the big dune as the race course.