Do the heirs of an LLC member have the right to continue the operation of it, and exercise all of th



The Amendment of La. R.S. 12:1333 Section 1333 of Title 12 of the Revised Statutes addresses the death or incapacity of a natural person who is a member of a limited liability company. Section 1333 also addresses the dissolution or termination of a corporation, trust or other entity that is a member of a limited liability company.


Under Subsection (A) of Section 1333, a membership interest in a limited liability company is generally NOT HERITABLE. Rather, upon the death of a member, the member’s membership ceases and the representative of the deceased member’s succession is treated as an assignee of the member’s interest in the company. An assignee does not have the rights of a member. _For example, an assignee may not generally participate in the company business, vote on company matters or inspect the company records._


Except as otherwise provided in the articles of organization or a written operating agreement, if a member who is an individual dies or a court of competent jurisdiction adjudges him to be incompetent to manage his person or his property, the member’s membership ceases and the member’s executor, administrator, guardian, conservator, or other legal representative shall be treated as an assignee of such member’s interest in the limited liability company.


If the last remaining member dies, the duly appointed executor or administrator of the member shall have the authority to sell any real estate owned by the limited liability company.


If the last remaining member is an individual and a court of competent jurisdiction adjudges him to be incompetent to manage his person or his property, the curator of the member shall have the authority to sell any real estate owned by the limited liability company.


The amendment of Section 1333 appears intended to clarify that the provisions of Subsections (A) and (D) are default rules. More specifically, the provisions of Subsections (A) and (D) are subject to the provisions of the articles of organization or a written operating agreement of the limited liability company.


For example, the amendment of Subsection (A) of Section 1333 appears intended to clarify that appropriate provisions in the articles of organization or a written operating agreement of a limited liability company allow the transfer of a member’s membership interest in the company to the member’s heirs or legatees.


In the context of a multiple member limited liability company, an operating agreement is defined as “any agreement, written or oral, of the members.” La. R.S. 12:1301(A)(16) (2016). In the context of a single member limited liability company, an operating agreement is defined as “any written agreement between the member and the company.”


The provisions of Subsections (A) and (D) of Section 1333, as amended, are expressly subject to the articles of organization or a written operating agreement of the limited liability company. An oral operating agreement, if any, does not appear to form an exception to the default rules of Section 1333.


So, if you are representing a mom and pop in forming an LLC, and only one is a member, but the other expects to inherit all of the rights under the LLC, put language allowing that in the articles or operating agreement!


QUIZ


Suppose that you are drafting a deed based upon a standard Louisiana residential purchase agreement prepared by a real estate agent. The seller wants to sell the property in its current condition, and not be responsible for any defects found later. The seller has been careful to disclose any and all defects known to him at the time the purchase agreement was signed, and the purchase agreement has the box checked with the standard language for waiver of redhibitory rights against the seller. Which of the following is the best practice?


  • 1. Louisiana requires that the deed simply state that the property is sold "as is".

  • 2. Copy the full pertinent language from the purchase agreement into the sale, and have the buyer sign after the language as well as at the end of the sale document.

  • 3. Copy the full pertinent language from the purchase agreement into the sale, but it is only necessary for the buyer to sign at the end of the sale document where the notary and two witnesses sign.

  • 4. If the language to protect the seller is in the purchase agreement, that is all that is necessary, and no additional signatures, but the notary should make sure the language is in the the purchase agreement.


SEE BELOW FOR THE ANSWER


We hope you have enjoyed this month's newsletter. Call or email with any comments or questions.

dan@statewidenotaryedu.com, 225-266-1929



THE ANSWER TO THE QUIZ ABOVE IS 2.The full language contained in the purchase agreement should be included in the sale and signed below the language and again at the end of the document before the notary and witnesses. Alternatively, you may attach the language in an exhibit at the end of the sale document and have it signed at the bottom of the exhibit. It is only necessary for the buyer to sign the waiver language.

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