Articles of Incorporation Play a Key Role in Your UCC Filing
Clients frequently ask: “My customer’s name is on our agreement and I ran a query on the Secretary of State website; why do I need to pull the Articles of Incorporation too?”
Previously, we’ve mentioned that Articles of Incorporation are used to determine jurisdiction (see Articles of Incorporation: Not Just for Name Verification). In today’s example, Articles of Incorporation are important because even states make mistakes when indexing entities (more often than you’d think).
The first image is from the Ohio Secretary of State’s website. The search performed was for “J & J Flooring” and the returned result indicates the corporate legal name is “J & J Flooring, Inc.” so that’s what the creditor used on their credit application.
But look closer….
Under “filing type” the state indicates J & J Flooring is a Limited Liability Company, which is commonly referred to as an “LLC”.
So, which is it? “J & J Flooring, Inc.” or “J & J Flooring, LLC” — the only way to know for sure is to pull the Articles of Incorporation! Article 9 requires the debtor’s legal name, state of organization and the organization ID number – all three items are found on the Articles of Incorporation.
OK, here’s a look at the Articles of Incorporation. Drum roll please… aha! The entity’s corporate legal name is, in fact, “J & J Flooring, LLC”:
“Why can’t I just list ‘J & J Flooring’ on the filing, that way it will cover both ‘Inc.’ and ‘LLC’?” Because you can’t have your cake and eat it too.
We’ve previously discussed the importance of filing a UCC with the correct legal name, in fact, we specifically discussed a case where the creditor left “Inc.” off of the debtor’s name and the security interest was left unperfected. You can read more about that case here – What a Difference a Name Makes: Omission of “Inc.” Left Security Interest Unperfected.
It’s all about the standard search logic, and though you may think “Inc.” and “LLC” are what are sometimes referred to as noise words, they are still words – don’t jeopardize your position; pull and review Articles of Incorporation carefully!