- July 29, 2014
- All Florida Issuing Offices
- UNDERWRITING - The Florida Revised Limited Liability Company Act
Effective January 1, 2015, all limited liability companies domiciled in the state of Florida will be governed by the Florida Revised Limited Liability Company Act - Chapter 605, Florida Statutes. During the one-year phase-in period, which commenced January 1, 2014, LLC’s created prior to that date can elect to be subject to it by amending their operating agreement.
FORMATION OF THE LLC
Pursuant to Section 605.0201 of the new law, limited liability companies are formed by filing articles of organization with the Florida Department of State. The articles may provide that the LLC come into existence subsequent to the filing date. All LLC’s will be considered member-managed unless the articles state that the company is manager-managed. The New Act requires the articles of organization to state the name of the company, the street address of its principal office and the name, address and acceptance of the initial registered agent. It does not require the articles of organization to identify the names of the members or the managers. In fact, the Florida Department of State, Division of Corporation’s website may not reflect who the members or managers are.
STATEMENT OF AUTHORITY
Pursuant to Section 605.0302 of the revised act, an LLC may file with the Florida Department of State a “Statement of Authority” which may state who is authorized to bind the LLC in real estate transactions and may also contain limitations on the grant of authority. The authority can be granted to a member, a manager, or a third party.
Once a certified copy of a Statement of Authority is recorded in the official records, unless it contains a limitation of authority, it shall be conclusive in favor of a person who gives value without knowledge of the lack of authority of the person executing a deed or mortgage on behalf of the company. A Statement of Authority is effective for a period of five years, unless cancelled, limited by a subsequent Statement of Authority or a disassociation by the named manager or member from the LLC (such as being a debtor in bankruptcy) or other events as set forth in Section 605.0602. A disassociation becomes binding on third parties without actual notice of it by filing a statement of disassociation as prescribed by Section 605.0302(1).
AGENCY RIGHTS OF MEMBERS AND MANAGERS
The New Act modified the managing structure of an LLC and eliminated the term “managing member.” Absent a contrary provision in the articles of organization or operating agreement, the default structure for all Florida limited liability companies under the Act is that of a member-managed company and all members are considered agents of the LLC with authority to bind the company. On the contrary, if the company elects to be a manager-managed LLC, a member is not automatically an agent of the company just by being a member.
DISSOLUTION OF THE LLC
It is still the case that a dissolved limited liability company continues after dissolution for the purposes of winding up its activities and affairs. However, if the LLC is dissolved subsequent to the filing of the Statement of Authority, do not rely on it, unless subsequent to a dissolution, a new Statement of Authority which establishes who may act on behalf of the dissolved LLC is filed.
GUIDELINES FOR INSURING
- If the LLC is governed by the New Act, you may rely on the authority of a member in a member-managed company or a manager in a manager-managed company to execute a deed conveying the LLC’s interest in real property or a mortgage to encumber LLC property, provided there is no recorded certified statement of authority which limits that authority.
- In the event the articles of organization and the Department of State, Division of Corporation’s website does not identify the members or managers, you should require the production of the operating agreement for review.
- In the event the operating agreement does not exist or cannot be produced, then a certified Statement of Authority must be recorded pursuant to the statute.
- If there is a conflict between the information on file with the Division of Corporations (see www.sunbiz.org) and the governing documents as to who is authorized to sign and deliver instruments on behalf of the LLC, then you may request that a Statement of Authority be recorded in the official records.
- In cases in which the LLC wishes to use a power of attorney to convey or mortgage real property, and there is no Statement of Authority filed, the articles of organization and operating agreement should be reviewed to determine if such a delegation of authority is permissible.
- For all limited liability companies filed prior to January 1, 2014, which have not elected to be subject to the New Act, a review of the articles of organization and the operating agreement are necessary to determine who can bind the company. Otherwise, an affidavit executed by all the members of the LLC naming the individual with authority to convey or mortgage is necessary.
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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.