Authority to sell. Who has the right to sell property?

When individual people own property, this is a very easy question to answer…those individual owners have the right to sell the property and only need to prove that they are the same person as the owner of the property. This is usually done by producing a drivers license or ID. However, when the owner of the property is not an individual, this requires more investigation. Property can be owned by a corporation, LLC, trustee of a trust, partnership, etc. If that is the case, it is not always clear who has authority to sign for that entity in order to convey the property.

Corporation

When property is vested in a corporation, the documentation that will typically be required is a copy of the Articles of Incorporation, a resolution regarding the transaction and appointing an individual to sign on behalf of the corporation, and proof that the corporation is active with the secretary of state. This documentation is required in order to confirm that the transaction is allowed in the corporate documents and to confirm who has authority to sign for the corporation. The corporation must also be active, in most cases, in order to convey property. If the corporation has been dissolved, we would likely need proof as to who the individual shareholders were so they could sign in an individual capacity or the corporation would need to be reinstated with the secretary of state. However, there may be some situations where a representative of the corporation may still be able to sign with proper proof of authority.

Limited Liability Company (LLC)

Proving authority to sign for an LLC is similar to the requirements for a corporation…the seller would need to produce a copy of the Operating Agreement, a resolution regarding the transaction and appointing an individual to sign on behalf of the LLC, and proof that the LLC is active with the secretary of state. Sometimes a “seller” will produce a power of attorney (“POA”) from an individual who is authorized to sign for an LLC or corporation, but an individual POA is not sufficient to transfer authority to someone else to sign on behalf of the entity. A resolution from the board or members would be required.

Trust

Trust property is controlled by the trustee of the trust and trust real estate is usually vested in that person as trustee (ie: John Wolfe, Trustee of the Wolfe Family Revocable Trust). To show that the transaction is allowed by the trust, the seller would need to produce a copy of the trust agreement and the trustee would also need to sign a Certification of Trust at closing. There are some situations where the trustee is no longer able to serve as trustee and the trust agreement may appoint a successor trustee or it may require more than one trustee to sign. The Certification of Trust will confirm the main clauses of the trust and will state that the trust is still an active trust.

Partnership

If the property is vested in a partnership, the seller would need to produce a copy of the partnership agreement. That agreement will confirm that the transaction is authorized by the partnership and will identify the partners. In a general partnership, any general partner can bind the partnership, but if all of the partners are available, it isn’t a bad idea to have all of them sign. I recall one situation where the property was vested in Joe, Sr. and there was a quit claim deed signed by Joe, Jr. under a POA, conveying the property to the Joe, Sr. and Joe, Jr. Partnership. The contract to sell the property was signed by Joe, Jr. as a general partner of the Partnership. In that situation, we required both Joe, Jr. and Joe, Sr. to sign the deed, because Joe, Jr. could have been trying to sell Joe, Sr’s property without his knowledge.

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