FRAUDULENT CHANGES TO CORPORATE OFFICERS

FRAUD COMMITTED ON “SUNBIZ”

What is Sunbiz, and why is Sunbiz important to the Real Estate Industry? 

Sunbiz” is a website administered by the Florida Department of State, Division of Corporation, providing access to public information about Florida business entities (i.e., corporations, limited liability companies, limited partnerships, general partnerships, and limited liability limited partnerships). It  is a centralized location for filing documentation concerning the formation, registration, lookup, search, and management of business entities in the State of Florida. Sunbiz is widely recognized as “the place to go” for information on a Florida business entity.

Is the information available on Sunbiz reliable?

Generally, the information posted on Sunbiz is reliable; however, information obtained through Sunbiz must be verified and corroborated through independent sources, such as direct communication with the entity principals. Sunbiz, and the information provided on the website, are only a starting point. What is important to know and remember is that virtually anyone can file a document via the website. Sunbiz, among many other things, is simply a repository for business records and the collection and payment of fees. The website specifically states, “The Division of Corporations serves as a ministerial filing agency. As such, documents are accepted at face value.”

What if some fraudster wrongfully files a document without the knowledge or consent of the entities’ principals?

The Florida Department of State, Division of Corporations takes the position that disputes or fraudulent filings must be resolved between the affected parties or in the courts. However, in many instances, curative documents can be filed to correct Sunbiz records. In addition, in instances where a simple correction is not a viable option, a notarized “Statement of Fact” informing the public that the document in question was filed without the knowledge or consent of the entities’ officers may be submitted. The notarized statement will be made part of the public record for notice purposes, alerting anyone visiting the website and viewing that business’ records that something is amiss and that further inquiry will be necessary.

How can Agents protect themselves or clients from fraudulent activity on the Sunbiz website?

One “red flag” that often suggests fraudulent activity is when there has been a change in the officers of an entity within close proximity to a Closing Date. One needs to be ultra-cautious when reviewing Sunbiz records and verify the accuracy of information posted on the website through independent sources. Heightened scrutiny is particularly important when Sunbiz records reflect a change of officers within one year of the proposed Closing Date. Any agent, lender, title company, or attorney (and this list is not exhaustive), that is not virtually certain of the identity of the parties with whom they are dealing needs to obtain positive proof of the identities and filings listed on Sunbiz. The more thorough the inquiry into the identity of the parties, the less likely it will be that a fraudulent transaction will “slip through.”

Accordingly, should you have questions or concerns regarding fraudulent filings with Sunbiz, we urge you to contact or consult your local real estate attorney for additional guidance.

Sincerely,
Mark C. Hanewich, Esq. mhanewich@berlinpatten.com

Mr. Hanewich focuses his practice on commercial and residential real property transactions for individuals, businesses, and developers in all phases of real estate, from acquisition through mortgage financing, development, sales, and leasing

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