How to write an offer with the intention of creating an LLC

Question

If one were to decide to start creating an LLC for each new property at the time you get the contract, what is the proper way to go about writing the offer? Meaning is it okay to put what the LLC's name will be and then sign as member with the intention of having it created immediately upon contract acceptance? I'm sure I could just have one waiting at all times in case I do get a contract but looking for info on the situation I just mentioned (just thinking I suck with names and it would be convenient to name each one after the subject property).

Respectfully not looking for opinions on the merits of titling each property in an LLC at this time.

Jon K. · Answer

Thanks all. Moving forward I'll likely just keep one on the shelf but this helped out this weekend.

Michael Noto · Answer

Put "LLC to be formed" on the buyer line of the contract.

Mark F. · Answer

@Jon K. I agree with @Max T. - pu the offer in as your name and "closing entity TBD" and you are covered. My HML lender uses that verbiage in my POF letters and I've never had a issue with it at all.

Mark

Max T. · Answer

When I sold a lot to a developer he used his name as buyer  "or entity to be formed" so that's what I've done since then!

Chris Coleman · Answer

@Jon K.

I’m not an attorney, but I’ve created many LLC’s, made a lot of offers, and signed a lot of contracts.

I don’t think you want to sign an Offer Letter under the name of an entity that doesn’t exist.  Seems like if there were any unexpected hiccups in the eventual purchase, it could end up not going in your favor.

I can tell that if I were the Seller, I would not be comfortable agreeing to such in writing. I would probably say that I’ll accept your verbal offer and give you 24 hours to establish the LLC and sign the Letter, or something like that.

Why not just state in the Offer Letter that you plan to establish a [whatever State] LLC upon acceptance of the offer in which you will be the Sole Member, and that the LLC will be the Purchaser, hold Title, etc.

Again, I’m not an attorney, but also when you draft the Operating Agreement for the LLC, I would think you’d want to somehow reference the Offer Letter as a Resolution or somehow incorporate the fact the its binding on the LLC.

For state purposes, even for SM LLC’s, the LLC is a separate legal entity from you.  The LLC is not you and you are not the LLC.  It’s a separate entity, which is the whole point of setting it up in the first place.  So you just want to be sure and preserve that status.

Mike S. · Answer

@Jon K.

If you sign the contract in the name of an entity that does not exist at the time, your contract may be voided.

You can follow this advice

https://m.youtube.com/watch?v=69lQs1adQZM

Your name and or designated entity