Maintaining LLC’s

Last Updated on Tuesday, 9 August 2016 01:06 Written by Chris Griswold Tuesday, 9 August 2016 01:06

We all use LLC’s.  However, too many show up on my desk that are “not in good standing.”  Why?  How do you keep it from happening?  Read below, this is good stuff for everyone to know… (and don’t forget to click on my Facebook, Linked In or YouTube links below to also see my short video on this material).  Also, don’t forget to occasionally glance online at the Journal Record, you might spot one of my occasional contributions to the Lot Lines column.

Maintaining LLC’s

LLC’s are how real estate transactions occur; most of which are not in good standing or even dissolved to the surprise of their members/managers come time to sell or re-finance.  What do you need to remember when using LLC’s?

First, remember your LLC was filed with the Secretary of State on a certain day; upon the anniversary of which the Secretary of State will E-mail (not snail mail) the registered agent something called an “annual certificate.”  The annual certificate will ask the registered agent to confirm: 1) that the business is still active, and 2) that any new place of business be disclosed on the form – along with a payment of $25.00 being mailed to the Secretary of State.  The certificate is due on the anniversary filing date of the domestic LLC with the Secretary of State (or the anniversary date of registration of any duly registered foreign limited liability company with the Secretary of State).

Second, if you fail to do the foregoing (i.e., fail to mail in the completed annual certificate along with your remittance of the $25.00 to the Secretary of State) within 60 days after such anniversary filing (or registration) date, your LLC shall cease to be in good standing with the State.  So what?

Upon losing its status of good standing, the LLC:

  • Cannot bring any suit against any person or entity in any court in the State (which makes it hard for the LLC to collect monies due it, or
  • Will be dissolved automatically (as a matter of law, 3 years after such anniversary filing (or registration) date. This might mean the LLC will have to later change its name, if, years later, its previous name has since become unavailable.

If this happens, it’s not the end of the world (as the LLC can be re-instated and the managers/members themselves will not be held personally liable for any unperformed duties or obligations of such LLC simply due to such unfiled annual certificates), but it will slow up your closing, as your banker/escrow officer will tell you.

So, set an annually re-occurring reminder on the calendar starting about 45 days prior to such anniversary filing (or registration) date, and then diligently be on the lookout for these annual certificates that now only come to you via E-mail (and don’t forget to check your junk e-mail folder too during that time period).  Failing everything else, around the time of the anniversary date, call the Secretary of State and inquire about getting your annual certificate filed.

The information presented within this article is of a general nature and is not intended to be relied upon as legal advice in any particular matter without first consulting qualified counsel.

What My Clients Are Saying

“Chris Griswold has been a tremendous asset in making my dream a reality! His legal advice, strong business acumen and initiative in helping me find the answers got me started on the right track. His honesty, common sense and strong interest in helping me succeed was a welcome addition in finding the right partner for legal advice and direction. I look forward to working with him again in the future.” Margaret Holloway / Partner, Café 501 and Boulevard Steakhouse; President, Senior Care Network / Oklahoma City, Oklahoma

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Big Picture on Personal Guaranties and Bankruptcy Laws

Last Updated on Tuesday, 14 June 2016 12:59 Written by Chris Griswold Tuesday, 14 June 2016 12:59

At some point along the way, we’ve all signed personal guaranties and, likewise, we have also asked others to sign them for us.  Why?  It’s time to clear the air on what is accomplished when a personal guaranty is secured in a business transaction (whether it’s a loan, a lease or some other form of contract) and, conversely, how bankruptcy laws enter into the picture with their own set of mandates.  This is good stuff for everyone to know… (and don’t forget to click on my Facebook, Linked In or YouTube links below to also see my short video on this material).

Big Picture on Personal Guaranties and Bankruptcy Laws

Personal guaranties ensure that, regardless of whether the person with whom we’re dealing uses an incorporated entity (e.g., a corporation or an LLC) to conduct their business with us, we can always go find that person (referred to as a “natural person” under the eyes of the law) to collect our money.  In other words, if the natural person later on: a) defaults on their contractual obligations, b) dissolves their incorporated entity, and c) then goes down the street, and resumes their business operations under the name of a newly formed, incorporated entity, we can always go find the natural person and collect the debt.  Having a personal guaranty of a debt is a very good thing to help you collect your debt and is strongly encouraged….

Against this backdrop are the bankruptcy laws which, among other things, declare that any payments received by a creditor from a debtor within ninety (90) days of such debtor personally filing a petition for bankruptcy may be avoidable by a bankruptcy trustee for the benefit of other creditors.  What this means is that if the debtor works out a payment arrangement (or a settlement arrangement) with you and starts making payments, then, if within ninety (90) days later, they personally file a petition for bankruptcy, then the payments made to you during the ninety (90) day period are likely avoidable in a bankruptcy.  However, the golden rule still is to always take the money now and worry about preference liability in a bankruptcy later

Accordingly, if you’ve got a personal guaranty and go get cash from the debtor, that’s great….  However, keep your “eyes open” as to whether your debtor later files bankruptcy within 90 days of your receiving the money.  In certain situations, you may be better off to avoid all trouble by taking a lump sum settlement early on before the debtor’s financial picture further deteriorates and decides to personally file for bankruptcy.

The information presented within this article is of a general nature and is not intended to be relied upon as legal advice in any particular matter without first consulting qualified counsel.

What My Clients Are Saying

“Chris is a competent, hardworking attorney.  Chris is always there when you need him and you don’t have to wait a day to get a returned phone call.  He does what he says he is going to do in a timely manner.  He has the expertise to make problems simpler which makes them easier to solve.  He is honest, consistent and reliable.  He loves what he does and is active in the community.”
David Ostrowe / Owner, O & M Restaurant Group, Inc. / Oklahoma City, Oklahoma

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The Mailbox Rule

Last Updated on Friday, 6 May 2016 08:57 Written by Chris Griswold Friday, 6 May 2016 08:57

This month, we’re going to talk about something that you hardly ever hear about, the “mail box rule.”  It’s something that affects everyone….  Back at the end of last year (like every year it seems), with forthcoming tax changes looming on the horizon, property owners were selling property before the end of the calendar year.  I myself had a client (a buyer) who was eager to close on a certain large, commercial warehouse space (which didn’t ultimately close for other various reasons not discussed here).  The fact pattern gave rise to the application of the mailbox rule – something that sounds pretty dull (but isn’t).  What you’ll learn below will apply to most everything you do with important mail.  See more below (and don’t forget to click on my Facebook or YouTube links below to also see my short video on this material).

The Mailbox Rule ???

What is the Mailbox Rule?  Simply put, the rule is something (out of old common law) which says that a written offer made by someone through the mails is effective upon the intended recipient’s actual receipt of such offer.  Likewise, the rule says that, absent language in the contract which requires that actual receipt of such acceptance shall occur by or within a date certain, the recipient’s acceptance of such offer is effective upon dispatch (i.e., the date and time which the recipient physically places such written acceptance into the mailbox with a postmark upon it showing such date and time).

Facts:  Basically, the parties wanted to close the transaction by 12/31/15 (like everyone did).  However, the property was encumbered by a lease (a contract) which gave the lessee a right to purchase the property before any sale could occur; such right to be exercised by tenant within thirty (30) days of tenant’s receipt of notice of the proposed sale from landlord (seller).  Long story short, the parties wanted to provide written notice to the tenant of the contemplated sale; thus asking the tenant to either accept (or not accept) a purchase of the property on the same terms as offered to the buyer (my client).  By the time my client approached me on 11/24/15, time was getting short….  Furthermore, the lease didn’t have any language in it that required tenant’s notice of acceptance (or non-acceptance) to be actually received by landlord by any date certain (just the language above which required such right to be exercised by tenant within thirty (30) days of tenant’s receipt of notice from landlord of the proposed sale).  The seller, seller’s counsel, the brokers involved, my client, the title and abstract company (and their counsel) all suggested that landlord simply provide tenant with written notice of the proposed sale; thereby giving tenant thirty (30) days to either accept (or not accept) such offer.  Since it was still only 11/24/15, with 12/31/15 still being more than thirty (30) days away, everyone felt confident that tenant’s rights under the lease would be addressed and all requirements on the title insurance commitment could be safely met/satisfied, and, if no acceptance (or non-acceptance) was received back by landlord by 12/31/15, then a closing on the property could safely occur on 12/31/15.

What’s the problem hereWhat if tenant “dispatched” it’s acceptance to purchase the property on 12/22/15 (assuming that tenant received our written notice on 11/25/15 – the day after we mailed such notice to tenant on 11/24/15) and, given the increased number of parcels/packages deposited into the United States mails during the holidays, such acceptance wasn’t received by seller (the landlord) until after 12/31/15?  By that time, my client would have already closed on the property thus violating the terms and provisions of the lease (which, by the way, had lengthy damages/remedies for violating tenant’s rights).  See the problem???  The tenant’s acceptance and dispatch of such offer on 12/22/15 would have, unbeknownst to either landlord (the seller) or my client (the buyer), already legally and validly occurred back on 12/22/15 and, due to problems/delays with the mails, the parties would have closed anyway on the property thus violating tenant’s rights.

Take awaysRemember this for your own closings, other contractual dealings and come time to mail in your insurance premiums.  Also, don’t forget about the “mail box rule” when timely exercising your lease options to extend term (including when your tenants exercise their lease options).

What My Clients Are Saying

“Chris Griswold is the answer man.  When I have real estate questions, Chris is quick to reply with solutions and advice that is right on target.  I can always trust my clients to Chris’ care knowing he will treat them with courtesy and integrity.”
Darryl Meason / Broker Associate / NAI Sullivan Group / Oklahoma City, Oklahoma

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