It is not uncommon for a property owner to hold title in the name of a corporate entity. This can be a corporation, limited liability company, partnership or other entity type provided for by law. They do this for many reasons that can include liability protection and tax advantages.
When real property is going to be conveyed though, the title company needs to know a few very important things about that entity. When preparing to close our transaction we need to know the following:
1. Who has authority to complete the transaction?
2. What powers do our signers have?
3. Are there any limitations on those powers?
4. Does the entity properly exist?
5. Is the entity in good standing to conduct their transaction?
To confirm that we are ready to close we need to obtain the necessary governing documents from the parties. This typically includes the Operating Agreement or Company Resolutions (limited liability companies), a Partnership Agreement (partnerships) or a Corporate Resolution (corporations).
These governing documents must be reviewed in detail before a closing can occur and sometimes we need your help with getting these documents from your clients for our review.
CLOSINGS WITH ENTITIES:
WHAT SHOULD A REALTOR KNOW?
As a realtor, it can be a big help to notify your clients when they list the property, that the title company is going to request a copy of the governing documents and they are necessary for the file.
It is also very helpful to notify the title company if your clients intend to purchase in the name of the entity so that we have advance warning and can work with them to properly structure the file.
If you have a client ask you about deeding their property into an entity after closing you can send them this article and put them in touch with their TNT closer: bit.ly/3YbhZF6
Our closing teams at Texas National Title are all well versed in the complexities associated with closing into or out of an entity. We are the experts that you need and the partners that you can trust in all things escrow and title! Please do not hesitate to contact us with any questions that you have.