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Issue  40  Article  91
Published:  11/1/1998

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Recent Legislation Affecting Real Property
Chris Burti, Vice President and Legal Counsel

Notary Act Amendments

Senate bill S1552 has been ratified and approved by the governor giving relief to concerns about the validity of recorded instruments containing notary seals with a commission expiration blank filled in by hand. This problem was described in our April 1998 newsletter. The key changes include approval of stamp type seals containing permanent or handwritten commission expirations and corrective provisions for certain defects through October 1, 1998. Defects included in the validating section are expired commissions, erroneous information and defective seals.

The full text of these sections of the amended statute follows.

 

Section 7. G.S. 10A-11 reads as rewritten:

" 10A-11. Notarial stamp or seal.

A notary public shall provide and keep an official stamp or seal.

The stamp or seal shall clearly show and legibly reproduce under

photographic methods, when embossed, stamped, impressed, or affixed to a

document, the name of the notary exactly as it appears on the commission,

the name of the county in which appointed and qualified, the words `North

Carolina' or an abbreviation thereof, and the words `Notary Public'.

The official stamp or seal, as it appears on a document, may contain a

permanently imprinted or a handwritten expiration date of the notary's

commission. A notary public shall replace a seal that has become so

worn that it can no longer clearly show or legibly reproduce under

photographic methods the information required by this section. The stamp

or seal is the property and responsibility of the notary whose name

appears on it. However, upon revocation, the notary shall immediately

surrender the stamp or seal to the Secretary."

 

Section 10. G.S. 10A-16 reads as rewritten:

" 10A-16. Acts of notaries public in certain

instances validated.

(a) Any acknowledgment taken and any instrument notarized by a

person prior to qualification as a notary public but after commissioning

or recommissioning as a notary public, or by a person whose notary

commission has expired, is hereby validated. The acknowledgment and

instrument shall have the same legal effect as if the person qualified as

a notary public at the time the person performed the act.

(b) All documents bearing a notarial seal in which the date of

the expiration of the notary's commission is stated, whether correctly or erroneously, or having a notarial seal that does not contain a readable impression of the notary's name, or contains an incorrect spelling of the notary's name, or contains typed, printed, drawn, or handwritten material added to the seal, fails to contain the words `North Carolina' or the abbreviation `N. C.', or contains correct information except that instead of the abbreviation for North Carolina contains the abbreviation for another state are validated and given the same legal effect as if the errors had not occurred.

(c) All deeds of trust in which the notary was named in the

document as a trustee only are validated.

(d) This section applies to notarial acts performed before

October 1, 1998."

 

Survey Recording Amendments

The same bill made changes in the recording act to permit the recording of maps that do not comply with the signature and seal requirements. These non-conforming maps may be attached to recorded instruments for illustrative purposes.

The amendments are as follows:

Section 11. G.S. 47-30(m) reads as rewritten:

"(m) Maps attached to deeds or other instruments and submitted for recording in that form must be no larger than 8 1/2 inches by 14 inches and comply with either this subsection or subsection (n) of this section. Such a map shall either (i) have the original signature of a registered land surveyor and the surveyor's seal as approved by the State Board of Registration for Professional Engineers and Land Surveyors, or (ii) be a copy of a map, already on file in the public records, that is certified by the custodian of the public record to be a true and accurate copy of a map bearing an original personal signature and original seal. The presence of the original personal signature and seal shall constitute a certification that the map conforms to the standards of practice for land surveying in North Carolina, as defined in the rules of the North Carolina State Board of

Registration for Professional Engineers and Land Surveyors."

Section 12. G.S. 47-30(n) reads as rewritten:

"(n) A map that does not meet the requirements of subsection (m)

of this section may be attached to a deed or other instrument submitted

for recording

in that form for illustrative purposes only if it meets both of the

following requirements:

(1) It is no larger than 8 1/2 inches by

14 inches.

(2) It is conspicuously labeled, `THIS

MAP IS NOT A CERTIFIED SURVEY AND HAS NOT BEEN REVIEWED BY A LOCAL

GOVERNMENT AGENCY FOR COMPLIANCE WITH ANY APPLICABLE LAND DEVELOPMENT

REGULATIONS.'"

Corporate and LLC Curative Provisions

Failure to file annual reports is causing the administrative dissolution of many corporations and limited liability companies. Previously the entity had two years to reinstate if not covered under older statutory amendments. Two bills ratified in the recent session will provide a safe harbor for delinquent business entities.

Senate Bill S1552 set forth below will allow reinstatement with relation back for entities delinquent in filing annual reports for the years 19991 through 1997 even if they have been administratively dissolved. Upon reinstatement the entity may resume activity as if no suspension or dissolution had occurred except to the extent a party is actually prejudiced by the reinstatement. Note that these provisions do not apply to suspensions resulting from failure to pay franchise taxes.

 

" 55-16-22.1. Curative provision.

(a) A corporation that is delinquent in filing an annual report for any one or more of the years 1991 through 1997 may satisfy the annual report requirement and avoid administrative dissolution or revocation of its certificate of authority by completing all of the following on or before November 30, 1999:

(1) File a current annual report.

(2) Pay the current annual report filing fee provided in G.S. 55-1-22.

(3) Pay the annual report filing fee for each delinquent annual report.

(b) A corporation that has been issued a certificate of administrative dissolution under G.S. 55-14-21 or a certificate of revocation of authority under G.S. 55-15-31 for failure to file an annual report for any one or more of the years 1991 through 1997 may be granted a certificate of reinstatement or a new certificate of authority by completing all of the following on or before November 30, 1999:

(1) File a current annual report.

(2) Pay the current annual report filing fee provided in G.S. 55-1-22.

(3) Pay the annual report filing fee for each delinquent annual report.

(4) File an application for reinstatement or an application for a new certificate of authority, whichever is appropriate. The filing fee is waived. 

(5) Comply with G.S. 55-4-01. The certificate of reinstatement and the certificate of authority, when it is effective, relates back to and takes effect as of the date of the administrative dissolution or of the certificate of revocation of authority. The corporation may resume carrying on its business as if the administrative dissolution or certificate of revocation of authority had never occurred, subject to the rights of any persons who are or have been prejudiced by such reinstatement.

(c) The relief provided by this section shall not be available to a corporation that receives a certificate of dissolution or a certificate of authority revoked for a reason other than the failure to file an annual report under G.S. 55-14-20 or G.S. 55-15-30." 

Article 6 of Chapter 57C of the General Statutes is amended by adding a new section to read:

" 57C-6-03.1. Curative provision.

(a) A limited liability company that is delinquent in filing an annual report for any one or more of the years 1993 through 1997 may satisfy the annual report requirement and avoid administrative dissolution by completing all of the following on or before November 30, 1999:

(1) File a current annual report.

(2) Pay the annual report filing fee provided in G.S. 57C-1-22.

(b) A limited liability company that has been issued a certificate of administrative dissolution under G.S. 57C-6-03 for failure to file an annual report for any one or more of the years 1993 through 1997 may be granted a certificate of reinstatement by completing all of the following on or before November 30, 1999:

(1) File a current annual report.

(2) Pay the annual report filing fee provided for in G.S. 57C-1-22.

(3) File an application for reinstatement. The filing fee is waived.

(4) Comply with G.S. 57C- 2-30. The certificate of reinstatement, when it is effective, relates back to and takes effect as of the date of the administrative dissolution. The limited liability company may resume carrying on its business as if the administrative dissolution of authority had never occurred, subject to the rights of any persons who are or have been prejudiced by the reinstatement.

(c) The relief provided by this section shall not be available to a limited liability company that receives a certificate of dissolution for a reason other than the failure to file an annual report under G.S. 57C-6-03."

Senate Bill S157 was also passed in this session and it expands the reinstatement period for corporations and limited liability companies to five years. The bill also permits the formation of single member limited liability companies, authorizes merger of the parent corporation into a subsidiary, correction of erroneous filings and increases filing fees. Many of the amendments to Chapter 55 are also included in Chapter 55A and 57c but are not set forth due to space limitations. These amendments will be of assistance to title examiners finding defects when title is in a business entity and the most relevant ones are set forth below.

 

ADMINISTRATIVE DISSOLUTIONS.

G.S. 55-14-22(a) reads as rewritten:

"(a) A corporation administratively dissolved under G.S. 55A-14-21 may apply to the Secretary of State for reinstatement not later than five years after the effective date of dissolution. The application shall:

(1) Recite the name of the corporation and the effective date of its administrative dissolution; and 

(2) State that the ground or grounds for dissolution either did not exist or have been eliminated." G.S. 57C-6-03(c) reads as rewritten:

"(c) A limited liability company administratively dissolved under this section may apply to the Secretary of State for reinstatement not later than five years after the effective date of the administrative dissolution. The procedures for reinstatement and for the appeal of any denial of the limited liability company's application for reinstatement shall be the same procedures applicable to business corporations under G.S. 55-14-22, 55-14-23, and 55-14-24."

CLARIFICATION OF ARTICLES OF CORRECTION PROCEDURES.

G.S. 55-1-24(a) reads as rewritten:

"(a) A domestic or foreign corporation may correct a document filed by the Secretary of State if the document (1) contains a statement that is incorrect and was incorrect when the document was filed or (2) was defectively executed, attested, sealed, verified, or acknowledged."

G.S. 57C-1-24(a) reads as rewritten:

"(a) A domestic or foreign limited liability company may correct a document filed by the Secretary of State if the document (i) contains a statement that is incorrect and was incorrect when the document was filed or (ii) was defectively executed, attested, sealed, verified, or acknowledged."

RESTATEMENT OF LIMITED LIABILITY COMPANY ARTICLES OF ORGANIZATION.

Section 18. Article 2 of Chapter 57C of the General Statutes is amended by adding a new section to read:

" 57C-2-22.1. Restated articles of organization. 

(a) A limited liability company may restate its articles of organization at any time with or without member action.

(b) The restated articles of organization may include one or more amendments to the articles. Unless otherwise provided in the articles of organization or a written operating agreement, any amendment requires the unanimous vote of the members. The restated articles of organization may include a statement of the address of the current registered office and the name of the current registered agent of the limited liability company.

(c) A limited liability company restating its articles of organization shall deliver to the Secretary of State for filing articles of restatement that:

(1) Set forth the name of the limited liability company.

(2) Attach as an exhibit thereto the text of the restated articles of organization.

(3) State that the restated articles of organization do not contain an amendment or, if the articles do contain an amendment, that there is an amendment that was approved as required by this Chapter.

(d) Duly adopted restated articles of organization supersede the original articles of organization and all amendments to them.

(e) The Secretary of State may certify restated articles of organization as the articles of organization currently in effect, without including the other information required by subsection (c) of this section."

PART VI. CANCELLATION OF ARTICLES OF DISSOLUTION OF LIMITED LIABILITY

COMPANY.

Section 19. Article 6 of Chapter 57C of the General Statutes is amended by adding a new section to read: 

" 57C-6-06.1. Cancellation of articles of dissolution. After the filing of articles of dissolution by a limited liability company dissolved pursuant to G.S. 57C-6-01(4) because of the happening of an event of withdrawal, the articles of dissolution may be cancelled if, within 90 days after the event of withdrawal, all remaining members agree in writing that the business of the limited liability company should be continued and the limited liability company files articles of cancellation with the Secretary of State. The articles of cancellation shall set forth:

(1) The name of the limited liability company;

(2) The date of the event of withdrawal described in the articles of dissolution;

(3) The date of filing of the company's articles of dissolution;

(4) A statement that within 90 days after the event of withdrawal all remaining members have agreed in writing that the business of the limited liability company may be continued;

and

(5) Any other information the members or managers filing the articles of cancellation determine."

PART XII. SINGLE MEMBER LIMITED LIABILITY COMPANIES.

Section 28. G.S. 57C-2-20(a) reads as rewritten:

"(a) One or more persons may organize a limited liability company by delivering executed articles of organization to the Secretary of State for filing."

PART XIII. CORPORATE MERGERS.

Section 29. G.S. 55-11-04 reads as rewritten:

" 55-11-04. Merger with subsidiary.

(a) Subject to Article 9, a parent corporation owning at least 90 percent (90%) of the outstanding shares of each class of a subsidiary corporation may merge the subsidiary into itself without approval of the shareholders of the parent or subsidiary. Subject to Article 9, a parent corporation owning at least ninety percent (90%) of the outstanding shares of each class of a subsidiary corporation may merge itself into the subsidiary without approval of the shareholders of the subsidiary if the merger is approved by the directors and shareholders of the parent corporation in accordance with G.S. 55-11-01 and G.S. 55-11-03.

(b) The board of directors of the parent shall adopt a plan of merger that sets forth:

(1) The names of the parent and subsidiary; and

(2) The manner and basis of converting the shares of the subsidiary each corporation into shares, obligations, or other securities of the parent surviving or any other corporation or into cash or other property in whole or part.

(c) The parent shall mail a copy or summary of the plan of merger to each shareholder of the subsidiary who does not waive the mailing requirement in writing.

(d) The parent may not deliver articles of merger to the Secretary of State for filing until at least 30 days after the date it mailed a copy or summary of the plan of merger to each shareholder of the subsidiary who did not waive the mailing requirement. This subsection does not apply to a merger in which the subsidiary was a public corporation before becoming a subsidiary qualifying for a merger under this section and is still a public corporation on the effective date of the merger.

(e) Articles of merger under this section may not contain amendments to the articles of incorporation of the parent surviving corporation (except for amendments enumerated in G.S. 55-10-02).

(f) The provisions of G.S. 55-13-02(c) do not apply to subsidiary corporations that are parties to mergers consummated under this section."


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