Three Tips For Bulk Sale Escrow Officers In CaliforniaUCC, Due Diligence, Tips
Are you a Bulk Sale Escrow Officer? Then this blog post is for you! We’ve been supporting Escrow Officers handling bulk sales for close to a quarter century, and over that period we’ve learned more than just a few things from our friends in the industry, and in our next couple of blog posts we share some of tips we’ve learned.
Tip #1: Search an individual seller’s name at any and all addresses
Because individual business owners may use another address, such as a residence or home office address, for conducting business on behalf of their sole proprietor business. Limiting your UCC Search to only a specific business address could be problematic for that reason and could potentially cause valid liens against the selling owner to be missed during the transfer of that business through escrow.
Tip#2: Determine if a seller’s corporation or limited liability company is in good standing
This is key because an entity that is not in good standing with the Secretary of State is considered to be out of compliance with State Law and is therefore suspended from operating and forfeits its powers, rights and privileges (including the right to use the entity name) to conduct business.
Tip #3: Cast a wide net when performing your UCC lien search
A general rule of thumb for good business practice in performing a UCC Lien Search on Bulk Sale Transfers is to cast a wide net. Use the rule of “more is better than less” when ordering a UCC Lien Search for your Bulk Sale business escrows, to identify all lien types found in a particular State or County Index. Not all liens are filed under the same debtor name rules as the Uniform Commercial Code, therefore, it is important to search your Sellers in a way to identify name variations for voluntary and involuntary liens in any particular index.
Do you have questions or comments? Contact us today! And if you have more tips for Bulk Sale Escrow Officers to consider, please share them with us.