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Issue  50  Article  109
Published:  9/1/1999

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1999 Legislative Update Affecting Real Property
Chris Burti, Vice President and Legal Counsel

 There have been a number of bills adopted in the current session of the General Assembly affecting real property. Some of the most significant will be treated in depth. Others that are self-explanatory, or have less general impact, will be summarized due to space limitations.

Execution and Acknowledgment of Corporate Conveyances

Senate Bill 761, 1999 Session Law 1999-221 substantially simplifies the execution and acknowledgment of corporate conveyances and entirely eliminates the seal requirement for real property conveyances. G.S. 47-41.01, effective October 1, 1999 has been rewritten to permit the corporate forms of execution and acknowledgment prevalent in the rest of the country. This is a significant improvement and should simplify closings affecting corporate ownership.

G.S. 47-41.01(c) will now permit corporate execution by one official and G.S. 47-41.01(d)(6) will permit omission of a corporate seal.

G.S. 47-41.01(d)(3) seems to indicate that there is a proper acknowledgment under the provisions of the act when an out of state acknowledging official doesn’t have a seal. If this is interpreted literally, it will be an improvement over NCGS Sec. 47-2.2 which requires an accompanying certificate. This provision may also permit acknowledgments by attorneys without seals located in states that authorize attorneys to take acknowledgments. Obviously, this will only be applicable to corporate conveyances and subject to the Register of Deeds’ willingness to accept for recording.

Because of the importance of the new provisions they are set forth as follows:

" 47-41.01. Corporate conveyances.

  1. The following forms of probate for deeds and other conveyances executed by a corporation shall be deemed sufficient, but shall not exclude other forms of probate which would be deemed sufficient in law.
  2. If the deed or other instrument is executed by an official of the corporation, signing the name of the corporation by him in his official capacity, or any other agent authorized by resolution pursuant to G.S. 47-18.3(e), is sealed with its common or corporate seal, and is attested by another person who an attesting official of the corporation, the following form of acknowledgment is sufficient: ............................................................................. (State and county, or other description of place where acknowledgment is taken) I,......................................., ............... ............... ............... ............... , (Name of officer taking (Official title of officer acknowledgment) taking acknowledgment) certify that ............................ (Name of attesting official) personally came before me this day and acknowledged that he (or she) is ................ (Title of attesting official) of.................., (Name of corporation) a corporation, and that by authority duly given and as the act of the corporation, the foregoing instrument was signed in its name by its................................., (Title of official) sealed with its corporate seal, and attested by himself (or herself) as its................................................ (Title of attesting official) Witness my hand and official seal, this the........... day of ....................., (Month) ...................... (Year) ....................................................... (Signature of officer taking acknowledgment) (Official seal, if officer taking acknowledgment has one) My commission expires.................................... (Date of expiration of commission as notary public)
  3. If the deed or other instrument is executed by an official of the corporation, signing the name of the corporation in his official capacity, or any other agent authorized by resolution pursuant to G.S. 47-18.3(e) the following form of acknowledgment is sufficient: (State and county, or other description of place where acknowledgment is taken) I, ........................................, (Name of officer taking taking acknowledgment) ............................, (Official title of officer acknowledgment) certify that ............................ (Name of official) personally came before me this day and acknowledged that he (or she) is ................ (Title of official) of.................., a corporation, and that he/she, as ......................................, (Title of official) being authorized to do so, executed the foregoing on behalf of the corporation. Witness my hand and official seal, this the........... day of ....................., (Month) ...................... (Year) ....................................................... (Signature of officer taking acknowledgment) (Official seal, if officer taking acknowledgment has one) My commission expires.................................... (Date of expiration of commission as notary public)
  4. For purposes of this section:
    1. The words "a corporation" following the blank for the name of the corporation may be omitted when the name of the corporation ends with the word "Corporation" or "Incorporated."
    2. The words "My commission expires" and the date of expiration of the notary public's commission may be omitted except when a notary public is the officer taking the acknowledgment. The fact that these words and this date may be located in a position on the form different from the position indicated in this subsection does not by itself invalidate the form.
    3. The phrase "and official seal" and the seal itself may be omitted when the officer taking the acknowledgment has no seal or when such officer is the clerk, assistant clerk, or deputy clerk of the superior court of the county in which the deed or other instrument acknowledged is to be registered.
    4. The official of the corporation is the corporation's chairman, president, chief executive officer, a vice-president or an assistant vice-president, treasurer, or chief financial officer, or any other agent authorized by resolution pursuant to G.S. 47-18.3(e).
    5. The attesting official of the corporation is the corporation's secretary or assistant secretary, trust officer, assistant trust officer, associate trust officer, or in the case of a bank, its secretary, assistant secretary, cashier or assistant cashier.
    6. The phrase "sealed with its corporate seal" may be omitted if the seal of the corporation has not been affixed to the instrument being acknowledged."

Elimination of Seal

In the " Hades freezes over, Frosty pelts Satan with snowball " department, Article 1 of Chapter 39 of the General Statutes has been amended, effective June 25, 1999, by adding a new section.

" 39-6.5. Elimination of seal.

The seal of the signatory shall not be necessary to effect a valid conveyance of an interest in real property; provided, that this section shall not affect the requirement for affixing a seal of the officer taking an acknowledgment of the instrument."

This would also seem to apply to powers of attorney and should not conflict with G.S. 47-43.1, which provides that the power must be under seal for the attorney in fact to be empowered to execute an instrument under seal.

G.S. 1-47 has been rewritten to include land conveyances, without a seal, in the ten-year limitations period effective June 25, 1999.

G.S. 47-18.3 creates a presumption of authority for corporate conveyances executed in conformity with G.S. 47-41.01. Subsection (a) is helpful and applies to the ‘short form’ of execution. However, it contains exceptions for instruments not signed in the ordinary course of business of the corporation, instruments that on their face reveal a breach of fiduciary duty and instruments to a party having actual notice of breach of duty or lack of authority. Subsection (b) incorporates the existing presumption for the traditional form of corporate execution. While it creates a prima facie presumption of properly authorized execution, it is apparently still rebuttable. The new provisions clearly authorize a corporation to act through an agent (i.e. attorney in fact) resolving, somewhat, the existing debate on this issue. The new section, effective October 1, 1999, reads as rewritten:

" 47-18.3. Execution of corporate instruments; authority and proof.

  1. Notwithstanding anything to the contrary in the bylaws or articles of incorporation, when it appears on the face of an instrument registered in the office of the register of deeds that the instrument was signed in the ordinary course of business on behalf of a domestic or foreign corporation by its chairman, president, chief executive officer, a vice-president or an assistant vice-president, treasurer, or chief financial officer such an instrument shall be as valid with respect to the rights of innocent third parties as if executed pursuant to authorization from the board of directors, unless the instrument reveals on its face a potential breach of fiduciary obligation. The subsection shall not apply to parties who had actual knowledge of lack of authority or of a breach of fiduciary obligation.
  2. Any instrument registered in the office of the register of deeds, appearing on its face to be executed by a corporation, foreign or domestic, and bearing a seal which purports to be the corporate seal, setting forth the name of the corporation engraved, lithographed, printed, stamped, impressed upon, or otherwise affixed to the instrument, is prima facie evidence that the seal is the duly adopted corporate seal of the corporation, that it has been affixed as such by a person duly authorized so to do, that the instrument was duly executed and signed by persons who were officers or agents of the corporation acting by authority duly given by the board of directors, and that any such instrument is the act of the corporation, and shall be admissible in evidence without further proof of execution.
  3. Nothing in this section shall be deemed to exclude the power of any corporate representatives to bind the corporation pursuant to express, implied, inherent or apparent authority, ratification, estoppel, or otherwise.
  4. Nothing in this section shall relieve corporate officers from liability to the corporation or from any other liability that they may have incurred from any violation of their actual authority.
  5. Any corporation may convey an interest in real property which is transferable by instrument which is duly executed by either an officer, manager, or agent of said corporation and has attached thereto a signed and attested resolution of the board of directors of said corporation authorizing the said officer, manager, or agent to execute, sign, seal, and attest deeds, conveyances, or other instruments. This section shall be deemed to have been complied with if an attested resolution is recorded separately in the office of the register of deeds in the county where the land lies, which said resolution shall be applicable to all deeds executed subsequently thereto and pursuant to its authority. Notwithstanding the foregoing, this section shall not require a signed and attested resolution of the board of directors of the corporation to be attached to an instrument or separately recorded in the case of an instrument duly executed by the corporation's chairman, president, chief executive officer, a vice-president, assistant vice-president, treasurer, or chief financial officer. All deeds, conveyances, or other instruments which have been heretofore or shall be hereafter so executed shall, if otherwise sufficient, be valid and shall have the effect to pass the title to the real or personal property described therein."

The adoption provisions of the act apply retroactively to instruments not the subject of litigation and therefor, operate as remedial legislation as well.

Notarial acts Validated

Chapter 10A of the General Statutes has been amended by adding a new section.

" 10A-17. Certain notarial acts validated.

(a) Any acknowledgment taken and any instrument notarized by a person whose notarial commission was revoked on or before January 30, 1997, is hereby validated.

(b) This section applies to notarial acts performed on or before August 1, 1998."

This appears to have been drafted to cure a specific problem. Of broader application G.S. 10A-16(d), is amended to read: "(d) This section applies to notarial acts performed on or before February 28, 1999." As noted in an earlier article this is a broad remedial provision that cures many defective acknowledgments and extends its benefit from October 1, 1998. This amendment is effective April 13, 1999 and does not affect pending litigation.

There were several other bills passed that affect real property, however, space limitations force us to postpone discussion until next month.


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