Many real estate investors purchase and manage property through limited liability companies (LLC). Documents are usually executed by a manager or a member depending on how the LLC if formed. Recently a question arose as to whether a manager or member of an LLC may appoint a power of attorney to sign real estate transaction documents on behalf of the LLC in their absence?

North Carolina law provides that "the managers having general power to manage the LLC may delegate authority to act on behalf of the LLC to persons other than managers". See NCGS 57D3-22 Further, it states the delegation can be general. Another indicator of the power of a manager or member to delegate their authority is noted in the Statutory Short Form Power of Attorney as set out in G.S. 32A-1. Item (6) of the form confers on the attorney-in-fact named therein the power to conduct Business Operating Transactions.--To conduct, engage in, and transact any and all lawful business of whatever nature or kind for the principal. Therefore the answer is yes a power of attorney can be used to sign documents on behalf of an LLC.

Now, the permissibility of such an appointment seemingly being established, it appears the keys to use of the same would be first using a properly drafted Power of Attorney document for the real estate transaction. Second making sure the power of attorney appointment instrument is properly executed. The prudent closer will also make sure there is a resolution provided by the LLC confirming the power of attorney is still in valid and has to been withdrawn and they will provide the same to the title insurance company before the transaction closes to confirm they approve and will insure. This pre-approval step will prevent an “oh-no” moment after closing.

Published by Wendy Hughes on November 2, 2017