My biz partner and I have been rehabbing for a couple of years now. Our last couple of purchases have been from wholesellers, where our LLC purchased the wholeseller’s LLC in order to take hold of the property.
We’ve had an issue with the disbursement of funds when we resell the property. Since the wholeseller’s LLC (the one that we purchased) is the actual name on title, the settlement companies will only issue checks to that LLC. Our bank will not allow us to deposit the check with a different LLC name on the check. They will not even allow us to endorse it over to our LLC.
Each time we’ve had to open up another bank account in the name of the wholeseller’s LLC just to deposit the checks.
Does anyone know of an easier way to handle this? Or is this the only way to deal with this situation?
Get the person you bought the LLC from to sign a Limited Liability Power of Attorney allowing you to get the check made out to whomever you desire… If you need one please let me know… The one I have covers everything!
If you buy the LLC you now have corporate control of that LLC. There is no need for anyone to sign anything as once you own the LLC you can make any changes to your operating agreement, bye laws, partnership agreement or anything else in the LLC records simple by making an ammendment to the existing documents. These changes may need to be filed with the state of incorporation and a fee may need to be charged depending on the document.
Easiest way to move the property out of the LLC you bought is to deed the property from the one you bought into your actual LLC and abandon the LLC you bought, then since the property now belongs to your LLC checks can be made to you!
All the old owner signs is interests in the LLC to the new LLC owner, that’s it. Once it’s sold to a new party the old owner can’t authorize anything legally with a LLC he no longer owns!
A Limited Liability Power of Attorney is only legal until the LLC is sold, once it’s sold the Power of Attorney signed by the old Managing Partner is null and void because that managing partner no longer owns or manages the affairs of the LLC, the new owners now manage and control the LLC.
I would still get the POA signed just in case they missed something that needed to be signed.