Legal Question in Real Estate Law in California

If a corporation exists and operates in, say, California, but is not and never has been registered with the California Secretary of State, is it valid for that corporation to state on recorded documents that it is "...organized and existing under the laws of California."? And if so, why do other corporations bother to register with the SoS?

Asked on 6/24/13, 2:47 am

3 Answers from Attorneys

Timothy McCormick Libris Solutions - Dispute Resolution Services

It is absolutely not valid, since your question seems to indicate that it is organized under a different state. "Organized and existing under the laws of the State of California" is only true if the original state of incorporation is California (which by definition means filing the Articles of Incorporation with the California Secretary of State and the Articles declaring that the corporation will be a California corporation). If you mean that the "corporation" has never registered in ANY state, then it is not a corporation at all, and by default would be either a sole proprietorship if there is only one owner, or a de facto partnership if there is more than one.

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Answered on 6/24/13, 10:55 am

Anthony Roach Law Office of Anthony A. Roach

I agree with Mr. McCormick. A corporation cannot be created in California and not registered with the Secretary of State.

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Answered on 6/24/13, 12:45 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Suppose XY&Z, Inc. were incorporated in California in, say, 1890, and bought real estate in 1893, 1897 and 1902, indicating on the deeds it recorded that it was "organized and existing under the laws of California." Then, in 1907, XY&Z re-incorporates in some other state, let's say Nevada, but continues to own the real estate under the previously-recorded deeds. The new Nevada corporation may, by the way, incorporate under the XY&Z name, or use a different name. It is literally true that the (now) Nevada corporation was never incorporated in California, but as a practical matter, the Nevada corporation is a complete successor to the (former) California corporation, including being the owner of the former corporation's real property. The corporation might re-convey the property so that title would stand in the Nevada corporation's name, but that isn't really necessary.

Then, as to your second question, non-California corporations are required to register with the California SoS when they "do business" in California. Merely owning real estate is not considered "doing business" such as to require registration. However, when XY&Z, Inc., now a Nevada corporation, decides to hire a property manager and conduct a leasing operation using its California real-estate holdings, it begins to do business and thus incurs a duty to register and pay franchise taxes here.

I think the previous answers are probably correct in that they properly point out the high probability that this corporation is misbehaving -- I'm only trying to point out that this is not necessarily, for sure, 100% and absolutely so.

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Answered on 6/30/13, 2:54 pm

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