Property Sold By An LLC - Who Signs???

Question

There may be an answer lurking out here somewhere, but I have a closing set for Monday where 3 family members own a particular piece of property in an LLC.

Do all 3 members need to be present at closing to sign documents, or can the General Partner sign on behalf of the members to complete the sale?

I haven't dealt with LLC sales (obviously), but suggested all 3 be present to sign, just in case.

Anyone know the rules that would apply for Missouri?

Thanks in advance,

Dan

Christopher Mendoza · Answer

Ryan  D. Did the seller say that they are signing as "general partner"? An LLC should not have a general partner. As a result, be sure that the signature blocks have the proper title for the individuals signing. Operating agreements will normally set forth the powers that managers (if any) and members may have in dealing on behalf of the LLC. Just because someone is signing, does not mean that they have the authority to act on behalf of the entity.

Chris Martin · Answer

In general, the members should have a resolution showing/permitting the sale of the subject property. That resolution should be signed by the appropriate members. It need not be notarized in my state and I'd suspect that most (other than probably CA.) Then a designated member (generally identified in the resolution) can sign the HUD-1. The signature should have their designation below their signed name... either 'member', 'manager', or 'member/manager'. You do not need the OA for a closing.

If all sign, then a resolution would probably not be needed, but the closing firm may have a boiler plate resolution (or similar wording) that they may need to sign... state dependent.

Dan McCluskey · Answer

@Ryan Dossey - makes perfect sense.  I didn't see anything in their Operating Agreement relating to disposal of real estate, or any other asset, only as it relates to the sale of the LLC, which is NOT allowed solely by the Managing Member.

All 3 will show.  Problem solved.  :)

Dan McCluskey · Answer

@Christopher Mendoza - my bad.  Keep confusing those LP/LLP's with LLC's....you are correct.  The LLC has a "Managing Member", which is what I hastily overlooked.

I am not a lawyer and interpreting the Operating Agreement is not what I plan on getting involved at this stage of the game.  Hence, my comfort in requesting ALL members of the LLC be present for closing.

If all 3 signatures will be required, they'll be there to comply.  If not, better to have them and not need them, than need and not have.

Thanks for the clarification, and input.  Greatly appreciated.

Dan

Ryan Dossey · Answer

@Dan McCluskey  not a problem I am here anytime and in the area. I know we have ours set up so my partner and I both control 50% and any decisions need a majority vote. So with ours I am either required to have him sign a form stating that I have control over this particular decision or he is required to be there to sign.

Dan McCluskey · Answer

Ryan:

You hit the nail on the head...."better safe than sorry", which is why I suggested all 3 be present.

I'm sure the LLC Operating Agreement should hold the key, but I'm no lawyer and am in no position to offer advice.

I'm thinking the General Partner can execute on behalf of all members, but that would be for my clients and their attorney to hammer out.

Thanks for the reply and reinforcing my own gut feeling on the matter.

Accepted your request, too.  Thanks.  Look forward to talking to you some time.

Dan

Ryan Dossey · Answer

I think you are doing the smart thing and having all 3 of them there to sign. Normally there is either a controlling member(s) who would need to be there. That type of info would be dictated in their operating agreement normally. Better safe than sorry!