Who’s Your Party?LLCs, Corporations, Partnerships,

Trusts & MoreChicago TitleFebruary 2016

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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 ofDeeds indexing system?

GS 47 18 GS 47 20

GS 161 14.2 GS 161 22

GS 147 54.3(b) and (b1)

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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)

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RRED 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 orpartnership/LLC agreement that attempts to do the same.

• Any transaction that involves conveyancing or mortgaging of Land by orto an officer of a corporation, partner of a partnership, member of anLLC or parties to a trust.

• Foreign Executions When Directors or other entity officials are notlocated in the United States or the corporate documents reveal theowners are not located in the United States.

• Any recent amendment to the corporate/organizational documentsadding or deleting parties to the entity.

• Any variation in name, no matter how minor, in chain of title or thedocumentation 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.

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www.secretary.state.nc.us/

Corps, LLCs, LPs

Non Profits & Charities

Notary Public Standards

Minimum Standards forIndexing Real Property

Instruments

UCC’s

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Non ProfitsBy

County

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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

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ENTITIES• ALWAYS review the organizationaldocuments for authority

• Articles for CORP, LLC, LP must be filedwith Secretary of State (or equivalent) oftheir home state

• Annual Reports– current officers/managers legal reliance– current address– good standing

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ENTITIES (cont’d)

• Property titled in the entity is not subject toclaims of creditors or spouses of individualowners (though the individual’s stock orpartnership interest may be)

• Self Dealing is BAD!

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ENTITIES: Name change, conversion,consolidation or merger (G.S. 55D 26)

Certificate issued by the NC Secretary of State (orentity’s resident state authority) MUST:• Recite name change, merger, consolidation orconversion

• Be recorded in Register(s) of Deeds whereproperty lies

• Former entity = “Grantor”• New entity = “Grantee”

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ENTITIESDissolutions

• Title remains vested in entity• For current transaction, either:

– Deeds must be consistent with windingup

OR– Entity must bring reports, fees, taxescurrent

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CORPORATIONS(G.S. Ch. 55)

• Articles of Incorporation @ Secretary ofState (resident state)

• Merger or name change– G.S. 55D 26– Register of Deeds– Secretary of State (resident state)

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CORPORATIONS (cont’d.)

• Mortgage, sale in ordinary course ofbusiness or sale leaving 25% of assetsand income or revenues– Board of Directors without shareholderapproval

G.S. 55 12 01

• All or substantially all requiresshareholder approval

G.S. 55 12 02

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Limited Liability Companies (LLCs)G.S. Ch. 57D

• Articles of Organization @ Secretary ofState (resident state)

• “Managers” (title depends on OperatingAgreement)

• Annual Report = legal reliance onauthority of named persons

• Merger or name change– G.S. 55D 26– Register of Deeds– Secretary of State (resident state)

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LLCs (cont’d)Subject to Operating Agreement:• Ordinary course of business:

– by a single manager or delegateeG.S. 57D 3 20

• Transfer all or substantially all of theassets of the LLC:– unanimous vote of all members

G.S. 57D 3 03(3)

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GENERAL PARTNERSHIP• Partnership name OR individuals

– Association of 2 or more persons to carry on asco 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 ofDeeds (proposed changes 2015)

G.S. 59 84.1 & 66 68

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• Not apparently for the carrying on in the usualway of the business of the partnershiprequires joinder of all general partners

G.S. 59 39 & 59 40

GENERAL PARTNERSHIP (cont’d)

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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)

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• Apparently carrying on in the usual way thebusiness of the partnership

G.S. 59 39(a)

• Not apparently for the carrying on in theusual way of the business of the partnershiprequires joinder of all general partners

G.S. 59 403(a)G.S. 59 39(b) & (c), G.S. 59 40

LIMITED PARTNERSHIPPowers regarding Real Property

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• Articles of Incorporation @ Secretary ofState (resident state)

• Merger or name change– G.S. 55D 26– Register of Deeds– Secretary of State (resident state)

NONPROFIT CORPORATION

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NONPROFIT CORPORATION(cont’d)

Board of Directors unless Articles orBylaws require otherwise

• Sell, lease, exchange or dispose of inusual & regular course of activities

• Mortgage or encumber, whether ornot in usual and regular course of itsactivities

G.S. 55A 12 01

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NONPROFIT CORPORATION(cont’d)

By members and directors, subject toArticles and Bylaws

• Sell, lease, exchange or dispose of otherthan in usual & regular course ofactivities

G.S. 55A 12 02Charitable or Religious organizations mustgive notice to NC Attorney General

G.S. 55A 12 02(g)

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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 oftrust are same

• Trust agreement for authority to deal withreal propertyGS 36C 8 816(2), (8), (9), (10)GS 36C 10 1012 and 1013 (Certification of Trust)

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TRUSTS (cont’d)

• NO self dealing unless specificallyauthorized in trust, by beneficiaries or bycourt incl. mortgage on trust propertyfor individual debt – presumed conflict

• GS 36C 8 802 VOIDABLE

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Trusts (cont’d)• Co trustees

• GS 36C 7 703• Trustee successors

• GS 36C 7 707 & 704• Judgments against beneficiaries oftrust can attach to trust property ifsupplemental proceedings

• GS 1 315(4)

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“NAKED” or “BLIND” TRUSTSG.S. 43 63

• Grant to trustee only• No beneficiary or specific trust identified• No record instrument stating powers• “full power to convey or otherwise disposeof the real estate”

• NOTE: If passive trust, converts to fee sospouse’s and creditors’ potential interestsmust be addressed

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BUSINESS TRUSTSG.S. 39 44 et seq.

Memorandum of Trust requiredG.S. 39 46

• Trustees sign conveyances if title in trustees’names

• Officers sign conveyances if title in commonname of Business Trust

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VOLUNTARY ORGANIZATIONS(G.S. 39 24 et seq. now repealed)

• Title can be held by trustees or incommon name

• Charitable, fraternal, religious or socialorganizations

• Conveyance must be authorized by“resolution of the body duly constitutedand held”

G.S. 39 24

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CHURCHES & RELIGIOUSORGANIZATIONS

• Entity type & name inwhich title held

• Title limitations investing instrumentReversions andrestrictions

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CHURCHES & RELIGIOUSORGANIZATIONS (cont’d)

Types of organizations :• Nonprofit corporation G.S. Chapter 55A• Religious Societies, (bishops, ministers, otherecclesiastical 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”)

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CHURCHES & RELIGIOUSORGANIZATIONS (cont’d)

• Local church– Organizational documents / requirements– Approval by congregation and board– Authorized persons

• Connectional churches– Organizational requirements– Due authorization and approval– Web sites

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Tenancy in Common (TIC)Co ownership between two or more persons orentities, each owning a separate undivided interestin the land and each having a right to occupy thewhole in common with the other co tenants

IF STATE PERCENTAGES,MAKE SURE THEY ADD

UP TO 100%!!

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