Authorization Documentation establishes (i) the exact legal name of the borrower or guarantor, (ii) assumed names used by the borrower or guarantor, and (iii) the authority of the borrower to incur debt or the Guarantor to guaranty the loan, and the authority of the individuals signing the loan documents to sign such documents. The Certificate of Name and Address should be completed by the borrower. A sample form is located at the end of this Chapter. Bankers will benefit from a working knowledge of Texas “dba” law, the Texas Assumed Business or Professional Name Act, Chapter 71 of the Texas Business and Commerce Code located at Tab 31. At a minimum the loan file should include the documents identified for the types of borrowers, cosigners or guarantors indicated.
In real estate transactions in which the Bank receives a Lender’s Title Policy, the Texas title insurance company policy typically insures that the documents affecting title have been properly created, executed, witnessed, sealed, acknowledged, notarized and delivered and that the persons or entities signing the documents have authority to make the transfer or conveyance and are not incompetent, incapacitated or impersonating someone. Also, that the signatures are not forged or the result of fraud, undue influence or duress. However, it is still recommended that the Bank require Authorization Documents from each borrower and guarantor to confirm that the borrowing and guaranteeing are authorized.
Commercial real estate loans often also involve a grant of a lien on personal property which requires a UCC-1 filing at the state level. Therefore, the Bank must insure it has the exact legal name of the debtor.