Statements of Authority Clarify Responsibility and Real Estate Transactions

In this post I will look at two real improvements to Iowa's LLC law.  Currently, all members of an LLC are agents of the LLC unless the articles of organization provide otherwise (Iowa Code 490A.702).  Beginning in January 2009 Iowa Code Section 489.301(1) will provide that a member is not an agent of the LLC merely because he or she is a member.  The risk of a rogue member binding or otherwise obligating LLC will be gone.

To clarify the lines of responsibility further, Iowa Code Section 489.302 will permit an LLC to deliver to the Secretary of State for filing a statement of authority. The statement will be notice of who does or does not have authority to act for the LLC to execute an instrument transferring real property or to enter into transactions on  behalf of or otherwise act for or bind the LLC.  The statement can state the authority or limits on authority by position (e.g. manager or president) or a specific person or persons.

Filing the statement of authority in the recorder's office will be conclusive in favor of a person who gives value for real property in reliance on the statement.  Likewise, a recorded statement limiting the authority of a person or position to transfer real property will be notice to all.

A statement of authority will expire 5 years after it or the most recent amendment becomes effective, unless canceled earlier.

-Marc Ward