STANDARD NO. 402
PROBLEM:
A. Where a grantor in an instrument in the chain of title was a corporation, should the examiner require evidence of director or stockholder authorization for the transaction which has already occurred?
B. Is the answer different if the record shows or the examiner is aware that the corporation was suspended at the time of the transaction?
C. Is the answer different if the record shows or the examiner is aware that the corporation was dissolved at the time of the transaction?
D.
Is the answer different if the record shows or the
examiner is aware that the corporation is a foreign corporation without
authority to transact business in the State of
RECOMMENDATION:
No, in each of the foregoing situations. Evidence of director or shareholder authorization should be required only for a pending transaction where the grantor is a corporation not engaged in the business of dealing in real estate, and such evidence need not be recorded.
DISCUSSION:
A. General practice has been not to record corporate votes authorizing conveyances. Except in a pending transaction, requiring production of a corporate vote would impose an unreasonable burden on the proponent of the title. Further, the validation statute, 33 M.R.S. § 353-A(3) (33 M.R.S. § 353 was repealed and replaced September 18, 1981), eliminates the problem for all conveyances prior to the specified date.
B. The requirement that the Secretary of State suspend the authority of a domestic corporation for failure to appoint or maintain a clerk or to file a notice of change of registered office or clerk under 13-A M.R.S. §308 was repealed by P.L. 2001, ch. 640, §A-1, effective July 1, 2003. A suspended corporation which failed to apply for reinstatement by June 30, 2009 is administratively dissolved. See 13-C M.R.S. §1424. See Discussion C below.
C. Following dissolution, whether voluntary or administrative, the “…corporation continues its corporate existence but may not carry on any business except that which is appropriate to wind up and liquidate its business ….” 13-C M.R.S. §1406 (effective July 1, 2003). For a dissolved corporation evidence should be required only for a pending transaction that the pending transaction is related to the winding up and liquidation of the corporation, such as disposing of property not to be distributed to the shareholders or distributing property to the shareholders according to their interests or a plan of dissolution. See, also, 13-C M.R.S. §1406(4), effective October 1, 2007, for the authority of shareholders as liquidating trustees where there are no officers or directors available, and a similar predecessor provision, 13-A M.R.S. §1122(2) (effective January 1, 1972), repealed P.L. 2001, ch. 640, §A-1, eff. July 1, 2003, §B-7, for the authority of directors as of the date of dissolution or the survivors of such directors to act as liquidating trustees to dispose of undistributed property of the corporation.
First adopted August 25, 1960; amended March 1, 1971, June 19, 1975, September 20, 2006 and May 17, 2011. Formerly Title Standard No. 42.
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Standard No. 402 (cont.)
D.
For example, foreign corporations may own, without
more, nonagricultural real estate in
First adopted August 25, 1960; amended March 1, 1971, June 19, 1975, September 20, 2006 and May 17, 2011. Formerly Title Standard No. 42.
31A