When insuring transactions by a corporation, you generally must verify the good standing of the corporation (in state of domicile), authority of the corporation (stockholders’ approval may be required if the transaction involves the sale of the principal asset of the corporation), and whether the transaction appears bona fide and arms length.
Authority of Corporation
The Company requires for its review a copy of the articles of incorporation and bylaws, a satisfactory resolution of the Board of Directors authorizing the proposed transaction, Shareholders Resolution where applicable, and a Good Standing Certificate evidencing that the corporation is in good standing in the state of its incorporation. At the time the Company is furnished these items, the Company may make additional requirement or exceptions.
Comment: You should always verify the authority and good standing of the corporation. If the transfer or mortgage involves the principal asset of the corporation, also verify the shareholder approval.
Corporate Charter Has Been Forfeited – Require
The corporate charter of ____________________ has been forfeited or administratively dissolved. The Company requires that the charter be reinstated and that the Company be furnished satisfactory evidence of good standing. At the time the Company is furnished these items, the Company may make additional requirements or exceptions.
Comment: Many states impose a time limit to reinstate the charter. Even if the state has no time limit, do not rely upon a reinstatement after 5 years without the Company’s approval.
Corporate Restructure (Merger, Consolidation, e
The Company requires satisfactory proof of any consolidation, merger, or amendment of name of the corporation shown as vested with title. At the time the Company is furnished this item, the Company may make additional requirements or exceptions.
Comment: Require satisfactory documents that evidence any consolidation, merger, or name change. You also may call the Secretary of State in the corporation’s domicile and secure this evidence.
See Underwriting Manual
Alien (Non-American) Corporation Authority
The Company requires satisfactory evidence of the authority of the corporation to sell/mortgage the land, including: (i) A properly authenticated Certificate of Incorporation, along with a Resolution of the managing directors (in English) authorizing the conveyance/mortgage to be insured and authorizing a managing director to execute the deed/mortgage, is required, (ii) if the deed/ mortgage is to be executed by an attorney-in-fact, then a duly executed Power of Attorney in form for recording must be produced and recorded with proof from the managing directors stating the said Power of Attorney is valid and binding and duly authorized, and (iii) a Certificate of Good Standing (in English).
Comment: Make these requirements when insuring on a sale or mortgage by an alien (typically offshore) corporation.
See Underwriting Manual
Corporation was Dissolved
The Company has been informed that the corporate owner was dissolved. The Company requires satisfactory recordable evidence of the names of the stockholders, a satisfactory deed from the stockholders individually and on behalf of the corporation, and satisfactory evidence that there are no outstanding debts or taxes of the corporation. At that time, the Company may make additional requirements or exceptions.
Comment: Sometimes a corporation is voluntarily dissolved. If so, Articles of Dissolution typically will reflect the intended successors in ownership. In the absence of a deed pursuant to the dissolution, also require joinder of the shareholders. Sometimes, the charter is forfeited involuntarily and you must then also be concerned with outstanding taxes, creditors of the corporation, and proof of stockholders. If there were outstanding creditors of the corporation, you must receive satisfactory evidence that they are paid, or you must except to the rights of creditors of the corporation unless their rights are barred by state limitations.
(a)____________________ to ________________
(If more (b)____________________ to ____________________
A status report (CT96A) is required from the City of New York evidencing the payment of New York City Business Corporation Taxes. If such report is not furnished by the corporation to the Company, exception will be taken for the lien of these taxes. The Company cannot obtain the report.
If neither of the above is obtained, then, the proofs showing the basis upon which the conveyance or lease is to be made must be submitted to counsel prior to closing.
Proof is required that the real property described in Schedule A does not constitute all or substantially all of the assets of the certified owner, a Not-For-Profit corporation .
(b) proof that the corporation is presently in good standing in the state of incorporation;
(c) New York State franchise tax;
(d) New York State license fee;
(e) New York City corporation tax.
Note: You may add additional local requirements here. Please consult with our underwriting personnel in preparing appropriate provisions.
See Underwriting Manual