Color Of Authority To Sign Listing Agreements & Contracts

A contract (which, for purposes of this Blog shall focus on Listing Agreements and Residential Contracts For Sale and Purchase), is only as good as the authority of the Seller and/or Buyer to sign them. Many times, I receive calls from agents asking who has authority to sign the Listing Agreement, and then the Contract once a deal is struck.  A few weeks ago, Andrew Conaboy authored our blog explaining who has authority to sign when an owner has died.  Today, I would like to give a few practice pointers on who can sign for a corporation, a limited liability company, or a partnership (sometimes referred to as “an entity” or “not a natural person”).

Corporations

A corporation acts by and through its officers. Under Florida law, “Any corporation may execute instruments conveying, mortgaging, or affecting any interest in lands by instruments sealed with the common or corporate seal and signed in its name by its president or any vice president or chief executive officer.” Florida Statutes §692.01.  If an officer other than the chief executive officer, president, or any vice president is to sign such a contract, a corporate resolution of the corporation’s board of directors will be necessary to establish the authority of that person to bind the corporation. The path of least resistance is for the CEO, or President, or any Vice President to sign.

Limited Liability Companies

In 2013, the Florida legislature rewrote Florida’s limited liability company act, and Chapter 605, Florida Statutes, now governs all Florida limited liability companies. Chapter 605 provides that a limited liability company is either member-managed or manager-managed. If the company is member-managed, all members have apparent authority to bind the company. If the company is manager-managed, all managers have apparent authority to bind the company, and members have no authority to bind the company. Accordingly, it is important to determine if the company is member-managed or manager-managed in order to establish who has the authority to bind the company.  The simplest way to do that is to obtain a copy of the operating agreement of the company to determine whether the person with authority is a member or a manager.  Please note, the 2013 revision did away with the title “Managing Member”; it no longer exists.  There are Managers and there are Members, but no Managing Members.

Partnerships

There are two (2) types of Partnerships – limited partnerships and general partnerships. A limited partnership must register and file a Certificate of Limited Partnership with the Secretary of State. A limited partnership acts by and through its general partner(s). Always obtain a copy of the limited partnership’s Partnership Agreement (and any amendments), and a copy of the Certificate of Limited Partnership. The Partnership Agreement will tell you who is authorized to sign contracts. Be careful – many limited partnerships require unanimous approval of the limited partners to sell the real property of the limited partnership.

Like a limited partnership, a general partnership acts by and through its general partner(s) (sometimes the general partners are loosely referred to as just “partners”). A general partnership does not have to register with the Secretary of State. However, a general partnership may file a Statement of Partnership Authority with the Secretary of State, which sets forth the partners who have the authority to bind the partnership. If there is no Statement of Partnership Authority filed with the Secretary of State, you will have to rely on the written partnership agreement of the general partnership. Sometimes, but not very often, the general partnership will not have a written partnership agreement. In such case, you will need to ask the partners “who are the general partners of this general partnership?”

If you are not sure of just whom has the authority to bind an entity for a particular transaction, or would like further explanation or clarification, contact one of the attorneys at Berlin Patten Ebling, or your local real estate attorney for additional guidance.

Sincerely,

Berlin Patten Ebling, PLLC

 

Article Authored by Mark C. Hanewich, Esq., mhanewich@berlinpatten.com

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

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