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A legal entity created under state law, consisting of an association of one or more individuals but regarded under the law as having an existence and personality separate from such individuals. The main characteristics of a corporation are its perpetual existence (that is, the corporation exists indefinitely and only ceases to exist if and when it is properly dissolved through legal proceedings); centralized management in the board of directors; liability of a shareholder limited to the amount of his or her investment; and free transferability of corporate shares.
A corporation has independent capacity to contract and to hold title to real property consistent with the powers given it in its articles of incorporation. Contracts into which the corporation has not been empowered to enter (ultra vires, or “beyond its powers”) may not be valid. Therefore, it is important to ascertain whether the corporation is empowered to enter into the contract and whether the person signing on behalf of the corporation is so authorized. This information is verified by requesting a copy of the board of directors’ certificate of resolution authorizing the contract and from the person signing it. Normally, board approval is sufficient to authorize a sale of corporate property, but when the sale constitutes most of the corporate assets, shareholder approval may be required.
When a new corporation is buying real property, it is important to verify that the articles have been filed and the corporation has in fact been legally formed; otherwise the deed is invalid for lack of grantee.
A corporation (except an S corporation) is taxed at special corporate income tax rates, and the stockholders must pay an added tax on dividends or other profits received from the corporation.
A closely held corporation is one owned by relatively few people, all or most of whom are directly involved in the conduct of the business, with very little stock held by outside investors.
Corporations are subject to regulation in the state of their incorporation and in the states where they do business. (See )
A corporation has independent capacity to contract and to hold title to real property consistent with the powers given it in its articles of incorporation. Contracts into which the corporation has not been empowered to enter (ultra vires, or “beyond its powers”) may not be valid. Therefore, it is important to ascertain whether the corporation is empowered to enter into the contract and whether the person signing on behalf of the corporation is so authorized. This information is verified by requesting a copy of the board of directors’ certificate of resolution authorizing the contract and from the person signing it. Normally, board approval is sufficient to authorize a sale of corporate property, but when the sale constitutes most of the corporate assets, shareholder approval may be required.
When a new corporation is buying real property, it is important to verify that the articles have been filed and the corporation has in fact been legally formed; otherwise the deed is invalid for lack of grantee.
A corporation (except an S corporation) is taxed at special corporate income tax rates, and the stockholders must pay an added tax on dividends or other profits received from the corporation.
A closely held corporation is one owned by relatively few people, all or most of whom are directly involved in the conduct of the business, with very little stock held by outside investors.
Corporations are subject to regulation in the state of their incorporation and in the states where they do business. (See )
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This "Word of the day" is excerpted from
The Language of Real Estate, 6th Edition
by John Reilly
(published by Dearborn Real Estate Education, 2006 copyright). To
purchase the complete book, with over 2800 key terms and definitions,
or to browse through Dearborn's hundreds of other professional real estate
titles, including Real Estate Technology Guide by Klein, Barnett, Reilly,
click here.
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