Katie: the answers below are correct - nothing to worry about - the title company will make sure the "seller" has the right and legal authority to transfer title - that is what the get paid for and that is what they issue title insurance for.

Tue Jul 22 2008, 22:43

So as long as the Title Insurance policy is issued I'm protected whether I bought from an LLC or not?

Tue Jul 22 2008, 13:58

The title policy protects you in the event that LLC doesn't actually own the property, which is a separate issue from what I described in my earlier response to your question. The issue I described relates to being able to close the deal, specifically: ensuring that the person who is representing the LLC has the actual authority to represent the LLC. If that person does not, two things could happen. 1) At the last minute the other "members" (owners) of the LLC could find out about it and cancel your deal (if they actually object to it); 2) The other members could later go to court to have the sale voided since the member who acted as seller did not have legal authority to do the transaction. If this happens you could lose the property and might have a difficult time getting your money back. That's why I recommend getting a statement up front confirming the seller has the authority to act for the LLC.
John

Tue Jul 22 2008, 12:52

Also what if something wasn't disclosed on the Title would I be protected if the seller is an LLC?
Thanks!

Tue Jul 22 2008, 12:41

So if the Title of Insurance Policy is issued I should be protected?

Tue Jul 22 2008, 11:51

Katie - Most investors place their properties in LLC's for liability protection and estate planning, so don't let it bother you. One thing to watch out for, though: make sure the person accepting your offer is authorized to act for the LLC. An LLC is owned by one person or one or more people or corporations (called "members" in LLC language). It's rare, but sometimes one member will try to sell the LLC's property without the approval of the other members. To reduce the risk of your deal falling out because of this type of situation, ask the seller to provide LLC documents or a written statement certifying that they are authorized to close the deal without the approval of others. Certifying that the person is the "president" or "managing member" isn't enough, they must be specifically authorized to sell the property. If other members exist, they should sign whatever document you are given.
Best of luck with your purchase!
John

Mon Jul 21 2008, 20:46

Katie,
As long as you use a competent Realtor it should not matter to you who the current owner is. Both you and your Lender will require Title Insurance so your eventual ownership should be protected. Your Realtor will make sure you are provided with all the disclosures and inspections required to feel comfortable with the property condition.
As always you should be prepared to question everyone throughout the process.
Good luck,
Bill

Mon Jul 21 2008, 18:09