Real estate owned by a company

Title issues

In this discussion, the focus is on the process of selling properties owned by entities, such as limited liability companies, corporations, and partnerships. The challenge lies in determining who has the authority to sign for the entity, as it is considered a separate legal entity. For partnerships, a consent resolution from all partners is required. In limited liability companies, there is an operating agreement that determines the authority of the members. In corporations, shareholders appoint the board of directors who then appoint officers with the authority to sign on behalf of the company. In larger corporations or partnerships, the actual governing documents must be examined to determine signing authority.

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Video Transcript

So we're talking about when entities end up owning the property and now they're going to sell the property.

Yep. So a lot of times we end up with various types of entities. You have limited liability companies. You have corporations. You have Partnerships.

Right? So let's unpack each one of those. Partnerships might not be formally created but you need a consent resolution from all the partners to transfer the property, because with anything the challenge with an entity owning property is we have to determine who has the authority to sign.

Right, because the entity in the eyes of law is a separate person if you will.

Right, and somebody is signing for that entity itself. So, we have to figure out who has the authority so all the partners have to sign on in limited liability companies. There's an operating agreement and the limited liability companies owned by the members. So, we like a consent resolution from all the members of the LLC consenting to the property transfer or in lieu of that and appointment by all the members. Somebody to sign similarly in corporations. So corporations are owned by shareholders. They appoint the board of directors, and the board of directors hires the officers right here. We're looking for a shareholder resolution similar to the member resolution of either all the shareholders or all the shareholders appointing somebody to sign on behalf of the company.

Right and sometimes it's not possible. Most of these companies are closely held by family owned by a couple partners, but you do run into situations where it's a large corporation or large partnership and when that happens, sometimes we do have to dive into the actual documents that govern that particular entity in that case with a corporation. We're looking for the minutes of the board of directors appointing the officers, what their authority is. We're looking for in a limited liability company the operating agreement that says who is appointed as manager who has the authority. And then in partnerships we're looking for partnership agreement.