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socrateaser
socrateaser, Attorney
Category: Business Law
Satisfied Customers: 37952
Experience:  Retired (mostly)
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ONLY SOCRATEASER SHOULD ANSWER THIS QUESTION. IF YOU ARE NOT SOCRATEASER YOUR ANSWER WILL NOT BE ACCEPTED.

Q: Can the sale of an LLC membership interest be accomplished by single document, or must there be separate purchase/sale and assignment documents?

Q: If it must be two instruments, can they be signed contemporaneously?

Q: Is the Seller exposed in any way during the period between the signing of the purchase/sale and the assignment?

Q: Once the purchase/sale agreement is signed, is there any basis upon which the Buyer can decline the assignment of interests?

Q: Is there a limit to the amount of time that can transpire between the signing of the purchase/sale and the assignment? Between the assignment and the closing date?

Q: If the LLC Operating Agreement contains this language: "Distributions made in liquidation of a Member's interest shall be made in accordance with the positive capital account balances pursuant to Treasury Regulation 1.704-I(b)(2)(ii)(b)(2), " can that language be used in place of a stating a sum certain in the purchase/sale or assignment agreements? Must the determination of account balances precede the signing of either document?
Submitted: 7 years ago.
Category: Business Law
Expert:  socrateaser replied 7 years ago.

I wish every question on this site had your title line! Cool

 

Q: Can the sale of an LLC membership interest be accomplished by single document, or must there be separate purchase/sale and assignment documents?

 

A: It could be done in a single document.

 

Q: If it must be two instruments, can they be signed contemporaneously?

 

A: It need no be, but yes, they could be.

 

Q: Is the Seller exposed in any way during the period between the signing of the purchase/sale and the assignment?

 

A: Yes, if the first document doesn't anticipate the second in the first document's language.

 

Q: Once the purchase/sale agreement is signed, is there any basis upon which the Buyer can decline the assignment of interests?

 

A: Yes, on any ground that the first contract was procured by fraud, mistake, duress, undue influence, etc.

 

Q: Is there a limit to the amount of time that can transpire between the signing of the purchase/sale and the assignment?

 

A: Without a specific time, a court would say "reasonable," which could be anything depending upon circumstances.

 

Between the assignment and the closing date?

 

A: Assuming that there is a closing date, then any time before closing.

 

Q: If the LLC Operating Agreement contains this language: "Distributions made in liquidation of a Member's interest shall be made in accordance with the positive capital account balances pursuant to Treasury Regulation 1.704-I(b)(2)(ii)(b)(2), " can that language be used in place of a stating a sum certain in the purchase/sale or assignment agreements?

 

A: Yes, as long as the transaction is being made in good faith, and the amounts can be reasonably calculated.

 

Q: Must the determination of account balances precede the signing of either document?

 

A: Nope.

 

Hope this helps.

 

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Customer: replied 7 years ago.
Q:   If the purchase/sale and assignment agreements are combined in a single document would there nevertheless be a need for the document to have two signature lines for the buyer, one for each agreement contained in the document? Or could the actual provisions of both agreements simply appear consecutively in the combined document?

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Q: There need not be a closing? For instance, the member could just mail me a check? Would the method of payment need to be specified in the agreement?


Expert:  socrateaser replied 7 years ago.

Wouldn't need multiple signatures. Just the verbiage.

 

A closing suggests an escrow company or neutral third party closing attorney. That's not strictly necessary, but the more valuable and complex the property, the more useful the escrow.

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