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The Mystic Wave
The Mystic Wave, Paralegal
Category: Legal
Satisfied Customers: 427
Experience:  30 yrs. exp. in the legal profession. Specializing in Personal Injury, Criminal, Civil & more.
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Unathorized use of Power of Attorney

Customer Question

An LLC was formed in which the registered agent added 5 other members and signed our names with POA. None of the other 5 members ever signed anything or authorized the registered agent (who is a lawyer) to sign or act on their behalf. Is that illegal? 4 of the members have been working under the assumption that they are members/owners of the LLC for 5 months, but have never signed anything. The registerd agent and one other member are the 2 listed managers and the LLC is manager-managed. The 4 members (1 of which is a manager) would like to have the other 2 removed. Can they on the basis that the registered agent (manager) used POA without authorization? Or is there some small law that says he can do that or that it was assumed?
Submitted: 11 years ago.
Category: Legal
Expert:  The Mystic Wave replied 11 years ago.

Greetings:


In many cases, an attorney can sign for a party(ies) - but that is when the attorney has the party's(ies') permission. If the 2 members do not wish for the names to be on the Power of Attorney, then just ask for the names to be removed. It is considered unethical for an attorney to have signed if unauthorized.


A specialist here was quite kind enough to bring to my attention the following: Many times the partnerhsip/LLC agreement will have a section that specifies that the partner/member appoints one or more general partners or managers as Power of Attorney. Thus, you should probably check the LLC member agreement to see if it contains such language.

If you wish for further information, please let me know - I will be happy to assist you.


If the information provided herein was helpful, please consider accepting my response.


Thank you kindly.


Bright Blessings.


Peace, Love & Happiness,


The Mystic Wave



Customer: replied 11 years ago.
Reply to The Mystic Wave's Post: Sorry, but that answer seems very vague - you really didn't tell me anything I already knew - but maybe my question wasn't specific enough.

The answer I need would have to be concrete enough to stand in a court. I'm in Utah, and would want backing for the answer - like where it states it in the code.

The problem is that 4 members want full ownership of the company because the other 2 are abusing priviledges and aren't contributing. No operating agreement was ever formed, and the 4 are looking for a way to remove the 2 from the company. I trying to find out what the Utah law says as far as if someone uses POA w/out permission, is that considered illegal? Does someone actually have to have a signed and notarized form giving permission for POA - or - can POA be verbal?
Customer: replied 11 years ago.
The problem is that 4 members want full ownership of the company because the other 2 are abusing priviledges and aren't contributing. No operating agreement was ever formed, and the 4 are looking for a way to remove the 2 from the company. I trying to find out what the Utah law says as far as if someone uses POA w/out permission, is that considered illegal? Does someone actually have to have a signed and notarized form giving permission for POA - or - can POA be verbal?
Expert:  jonacpa replied 11 years ago.

It is difficult to imagine an LLC being formed with NO operating agreement. If there is an operating agreement, that will govern how you remove a manager, how you remove a member, and all other similar issues that you wish to address.


If, in fact, there is not an operating agreement, you should be able to remove a manager by majority vote. To remove a member when there is no operating agreement specifying how this done would probably require a buyout for fair market value.


It is very possible, since the RA is an attorney, that there is an operating agreement and each of the members other than the original founding member subscribed to it by default when they bought in. If this is the case, you may need to go to court to get everything situated.


A Power of Attorney must be written (cannot be oral and still be valid), however, if there is an operating agreement (even one that you do not know about) that grants the manager, the registered agent, the particular member, etc Power of Attorney with respect to your dealings with the LLC, you may be subject to it even though it is unknown to you.


[email protected]
Expert:  joann replied 11 years ago.

did you ever appoint anyone or any other parties involved appoint someone as power of attorney?



UTAH GENERAL DURABLE POWER OF ATTORNEY

THE POWERS YOU GRANT BELOW ARE EFFECTIVE
EVEN IF YOU BECOME DISABLED OR INCOMPETENT

NOTICE: THE POWERS GRANTED BY THIS DOCUMENT ARE BROAD AND SWEEPING. THEY ARE EXPLAINED IN THE UNIFORM STATUTORY FORM POWER OF ATTORNEY ACT. IF YOU HAVE ANY QUESTIONS ABOUT THESE POWERS, OBTAIN COMPETENT LEGAL ADVICE. THIS DOCUMENT DOES NOT AUTHORIZE ANYONE TO MAKE MEDICAL AND OTHER HEALTH-CARE DECISIONS FOR YOU. YOU MAY REVOKE THIS POWER OF ATTORNEY IF YOU LATER WISH TO DO SO. THIS POWER OF ATTORNEY IS EFFECTIVE IMMEDIATELY AND WILL CONTINUE TO BE EFFECTIVE EVEN IF YOU BECOME DISABLED, INCAPACITATED, OR INCOMPETENT.

I ____________________________________________________________________________
_____________________________________________ [insert your name and address] appoint _____________________________________________ [insert the name and address of the person appointed] as my Agent (attorney-in-fact) to act for me in any lawful way with respect to the following initialed subjects:

TO GRANT ALL OF THE FOLLOWING POWERS, INITIAL THE LINE IN FRONT OF (N) AND IGNORE THE LINES IN FRONT OF THE OTHER POWERS.

TO GRANT ONE OR MORE, BUT FEWER THAN ALL, OF THE FOLLOWING POWERS, INITIAL THE LINE IN FRONT OF EACH POWER YOU ARE GRANTING.

TO WITHHOLD A POWER, DO NOT INITIAL THE LINE IN FRONT OF IT. YOU MAY, BUT NEED NOT, CROSS OUT EACH POWER WITHHELD.

Note: If you initial Item A or Item B, which follow, a notarized signature will be required on behalf of the Principal.

INITIAL

_______ (A) Real property transactions. To lease, sell, mortgage, purchase, exchange, and acquire, and to agree, bargain, and contract for the lease, sale, purchase, exchange, and acquisition of, and to accept, take, receive, and possess any interest in real property whatsoever, on such terms and conditions, and under such covenants, as my Agent shall deem proper; and to maintain, repair, tear down, alter, rebuild, improve manage, insure, move, rent, lease, sell, convey, subject to liens, mortgages, and security deeds, and in any way or manner deal with all or any part of any interest in real property whatsoever, including specifically, but without limitation, real property lying and being situated in the State of Utah, under such terms and conditions, and under such covenants, as my Agent shall deem proper and may for all deferred payments accept purchase money notes payable to me and secured by mortgages or deeds to secure debt, and may from time to time collect and cancel any of said notes, mortgages, security interests, or deeds to secure debt.

_______ (B) Tangible personal property transactions. To lease, sell, mortgage, purchase, exchange, and acquire, and to agree, bargain, and contract for the lease, sale, purchase, exchange, and acquisition of, and to accept, take, receive, and possess any personal property whatsoever, tangible or intangible, or interest thereto, on such terms and conditions, and under such covenants, as my Agent shall deem proper; and to maintain, repair, improve, manage, insure, rent, lease, sell, convey, subject to liens or mortgages, or to take any other security interests in said property which are recognized under the Uniform Commercial Code as adopted at that time under the laws of the State of Utah or any applicable state, or otherwise hypothecate (pledge), and in any way or manner deal with all or any part of any real or personal property whatsoever, tangible or intangible, or any interest therein, that I own at the time of execution or may thereafter acquire, under such terms and conditions, and under such covenants, as my Agent shall deem proper.

_______ (C) Stock and bond transactions. To purchase, sell, exchange, surrender, assign, redeem, vote at any meeting, or otherwise transfer any and all shares of stock, bonds, or other securities in any business, association, corporation, partnership, or other legal entity, whether private or public, now or hereafter belonging to me.

_______ (D) Commodity and option transactions. To organize or continue and conduct any business which term includes, without limitation, any farming, manufacturing, service, mining, retailing or other type of business operation in any form, whether as a proprietorship, joint venture, partnership, corporation, trust or other legal entity; operate, buy, sell, expand, contract, terminate or liquidate any business; direct, control, supervise, manage or participate in the operation of any business and engage, compensate and discharge business managers, employees, agents, attorneys, accountants and consultants; and, in general, exercise all powers with respect to business interests and operations which the principal could if present and under no disability.

_______ (E) Banking and other financial institution transactions.   To make, receive, sign, endorse, execute, acknowledge, deliver and possess checks, drafts, bills of exchange, letters of credit, notes, stock certificates, withdrawal receipts and deposit instruments relating to accounts or deposits in, or certificates of deposit of banks, savings and loans, credit unions, or other institutions or associations. To pay all sums of money, at any time or times, that may hereafter be owing by me upon any account, bill of exchange, check, draft, purchase, contract, note, or trade acceptance made, executed, endorsed, accepted, and delivered by me or for me in my name, by my Agent. To borrow from time to time such sums of money as my Agent may deem proper and execute promissory notes, security deeds or agreements, financing statements, or other security instruments in such form as the lender may request and renew said notes and security instruments from time to time in whole or in part. To have free access at any time or times to any safe deposit box or vault to which I might have access.

_______ (F) Business operating transactions. To conduct, engage in, and otherwise transact the affairs of any and all lawful business ventures of whatever nature or kind that I may now or hereafter be involved in.

_______ (G) Insurance and annuity transactions. To exercise or perform any act, power, duty, right, or obligation, in regard to any contract of life, accident, health, disability, liability, or other type of insurance or any combination of insurance; and to procure new or additional contracts of insurance for me and to designate the beneficiary of same; provided, however, that my Agent cannot designate himself or herself as beneficiary of any such insurance contracts.

_______ (H) Estate, trust, and other beneficiary transactions. To accept, receipt for, exercise, release, reject, renounce, assign, disclaim, demand, sue for, claim and recover any legacy, bequest, devise, gift or other property interest or payment due or payable to or for the principal; assert any interest in and exercise any power over any trust, estate or property subject to fiduciary control; establish a revocable trust solely for the benefit of the principal that terminates at the death of the principal and is then distributable to the legal representative of the estate of the principal; and, in general, exercise all powers with respect to estates and trusts which the principal could exercise if present and under no disability; provided, however, that the Agent may not make or change a will and may not revoke or amend a trust revocable or amendable by the principal or require the trustee of any trust for the benefit of the principal to pay income or principal to the Agent unless specific authority to that end is given.

_______ (I) Claims and litigation. To commence, prosecute, discontinue, or defend all actions or other legal proceedings touching my property, real or personal, or any part thereof, or touching any matter in which I or my property, real or personal, may be in any way concerned. To defend, settle, adjust, make allowances, compound, submit to arbitration, and compromise all accounts, reckonings, claims, and demands whatsoever that now are, or hereafter shall be, pending between me and any person, firm, corporation, or other legal entity, in such manner and in all respects as my Agent shall deem proper.

_______ (J) Personal and family maintenance. To hire accountants, attorneys at law, consultants, clerks, physicians, nurses, agents, servants, workmen, and others and to remove them, and to appoint others in their place, and to pay and allow the persons so employed such salaries, wages, or other remunerations, as my Agent shall deem proper.

_______ (K) Benefits from Social Security, Medicare, Medicaid, or other governmental programs, or military service. To prepare, sign and file any claim or application for Social Security, unemployment or military service benefits; sue for, settle or abandon any claims to any benefit or assistance under any federal, state, local or foreign statute or regulation; control, deposit to any account, collect, receipt for, and take title to and hold all benefits under any Social Security, unemployment, military service or other state, federal, local or foreign statute or regulation; and, in general, exercise all powers with respect to Social Security, unemployment, military service, and governmental benefits, including but not limited to Medicare and Medicaid, which the principal could exercise if present and under no disability.

_______ (L) Retirement plan transactions. To contribute to, withdraw from and deposit funds in any type of retirement plan (which term includes, without limitation, any tax qualified or nonqualified pension, profit sharing, stock bonus, employee savings and other retirement plan, individual retirement account, deferred compensation plan and any other type of employee benefit plan); select and change payment options for the principal under any retirement plan; make rollover contributions from any retirement plan to other retirement plans or individual retirement accounts; exercise all investment powers available under any type of self-directed retirement plan; and, in general, exercise all powers with respect to retirement plans and retirement plan account balances which the principal could if present and under no disability.

_______ (M) Tax matters. To prepare, to make elections, to execute and to file all tax, social security, unemployment insurance, and informational returns required by the laws of the United States, or of any state or subdivision thereof, or of any foreign government; to prepare, to execute, and to file all other papers and instruments which the Agent shall think to be desirable or necessary for safeguarding of me against excess or illegal taxation or against penalties imposed for claimed violation of any law or other governmental regulation; and to pay, to compromise, or to contest or to apply for refunds in connection with any taxes or assessments for which I am or may be liable.

_______ (N) ALL OF THE POWERS LISTED ABOVE. YOU NEED NOT INITIAL ANY OTHER LINES IF YOU INITIAL LINE (N).


SPECIAL INSTRUCTIONS:

ON THE FOLLOWING LINES YOU MAY GIVE SPECIAL INSTRUCTIONS LIMITING OR EXTENDING THE POWERS GRANTED TO YOUR AGENT.

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

THIS POWER OF ATTORNEY IS EFFECTIVE IMMEDIATELY AND WILL CONTINUE UNTIL IT IS REVOKED.

THIS POWER OF ATTORNEY SHALL BE CONSTRUED AS A GENERAL DURABLE POWER OF ATTORNEY AND SHALL CONTINUE TO BE EFFECTIVE EVEN IF I BECOME DISABLED, INCAPACITATED, OR INCOMPETENT.

(YOUR AGENT WILL HAVE AUTHORITY TO EMPLOY OTHER PERSONS AS NECESSARY TO ENABLE THE AGENT TO PROPERLY EXERCISE THE POWERS GRANTED IN THIS FORM, BUT YOUR AGENT WILL HAVE TO MAKE ALL DISCRETIONARY DECISIONS. IF YOU WANT TO GIVE YOUR AGENT THE RIGHT TO DELEGATE DISCRETIONARY DECISION-MAKING POWERS TO OTHERS, YOU SHOULD KEEP THE NEXT SENTENCE, OTHERWISE IT SHOULD BE STRICKEN.)

Authority to Delegate. My Agent shall have the right by written instrument to delegate any or all of the foregoing powers involving discretionary decision-making to any person or persons whom my Agent may select, but such delegation may be amended or revoked by any agent (including any successor) named by me who is acting under this power of attorney at the time of reference.

(YOUR AGENT WILL BE ENTITLED TO REIMBURSEMENT FOR ALL REASONABLE EXPENSES INCURRED IN ACTING UNDER THIS POWER OF ATTORNEY. STRIKE OUT THE NEXT SENTENCE IF YOU DO NOT WANT YOUR AGENT TO ALSO BE ENTITLED TO REASONABLE COMPENSATION FOR SERVICES AS AGENT.)

Right to Compensation. My Agent shall be entitled to reasonable compensation for services rendered as agent under this power of attorney.

(IF YOU WISH TO NAME SUCCESSOR AGENTS, INSERT THE NAME(S) AND ADDRESS(ES) OF SUCH SUCCESSOR(S) IN THE FOLLOWING PARAGRAPH.)

Successor Agent. If any Agent named by me shall die, become incompetent, resign or refuse to accept the office of Agent, I name the following (each to act alone and successively, in the order named) as successor(s) to such Agent:

________________________________________________________________________

________________________________________________________________________

Choice of Law. THIS POWER OF ATTORNEY WILL BE GOVERNED BY THE LAWS OF THE STATE OF UTAH WITHOUT REGARD FOR CONFLICTS OF LAWS PRINCIPLES. IT WAS EXECUTED IN THE STATE OF UTAH AND IS INTENDED TO BE VALID IN ALL JURISDICTIONS OF THE UNITED STATES OF AMERICA AND ALL FOREIGN NATIONS.

I am fully informed as to all the contents of this form and understand the full import of this grant of powers to my Agent.

I agree that any third party who receives a copy of this document may act under it. Revocation of the power of attorney is not effective as to a third party until the third party learns of the revocation. I agree to indemnify the third party for any claims that arise against the third party because of reliance on this power of attorney.

Signed this _______ day of _______________, 20____



______________________________
[Your Signature]



_______________________________
[Your Social Security Number]




--------------------------------------------------------------------------------

CERTIFICATE OF ACKNOWLEDGMENT OF NOTARY PUBLIC

STATE OF UTAH
COUNTY OF ________________

This document was acknowledged before me on _______________ [Date] by ________________________________________________ [name of principal].


[Notary Seal, if any]:

_______________________________
(Signature of Notarial Officer)

Notary Public for the State of Utah

My commission expires: ___________________





--------------------------------------------------------------------------------


ACKNOWLEDGMENT OF AGENT

BY ACCEPTING OR ACTING UNDER THE APPOINTMENT, THE AGENT ASSUMES THE FIDUCIARY AND OTHER LEGAL RESPONSIBILITIES OF AN AGENT.

________________________________________________
[Typed or Printed Name of Agent]


________________________________________________
[Signature of Agent]



--------------------------------------------------------------------------------


PREPARATION STATEMENT

This document was prepared by the following individual:

________________________________________________
[Typed or Printed Name]


________________________________________________
[Signature]



A power of attorney is a document that evidences the creation of a relationship between two people who are designated as the "principal" and the "agent". The principal designates the agent in the document, and the agent is authorized to act on the principal's behalf--to stand in the shoes of the principal--for whatever business the power of attorney permits. A power of attorney can be general, so that the agent can conduct any sort of business on behalf of the principal, or it may be specific, limited to the transactions expressly provided for in the document. Third parties may treat the agent as if he or she is the principal in any transactions which the agent is authorized to conduct. Powers of attorney are commonly used in all sorts of business activities, and are very frequently executed on behalf of individuals.

http://www.ilrg.com/forms/powatrny.html
Expert:  The Mystic Wave replied 11 years ago.

Greetings:


Thank you for responding and providing additional information. I am sorry that my initial response did not adequately answer your question.


To be specific, responding to your question about POA within an LLC, it would appear to be illegal to use it without permission.


To my knowledge, when dealing with an LLC, the POA should be notarized. Unfortunately, I am at a disadvantage being that I do not have the proper law books in order to look up the laws in the State of Utah.


The only code section(s) I have been able to locate for Utah is the following:


Concerning Power of Attorney: 75-5-501Utah Code Section 75-5-501


also, Power: 48-2c-110 Utah Code Section 48-2c-110


and, 48-2c-502. General rules for operating agreements.Utah Code Section 48-2c-502


You may wish to review the Utah Code -- Title 48 -- Chapter 02c -- Utah Revised Limited Liability Company Act


Utah Code -- Title 48 -- Chapter 02c -- Utah Revised Limited Liability Company Act


Additional information which you may already be aware of:


Being that you are dealing with an LLC, the LLC "operating agreement", a document separate and apart from the "articles of organization" controls the relations between managers and members should members be appointed. If no managers are appointed, then the LLC members, as a whole, must make and approve of all operational details of the LLC.


LLC Units are Securities. Please note that LLC ownership interests are considered a "security" under state law and the federal securities acts. Although there are exemptions for small offerings, you must check and comply with all federal and state securities laws before offering any LLC interest for sale.


......entities which may transact business with the LLC such as banks, title companies, buyers and sellers of assets often ask to see the written LLC Operating Agreement to verify that the individuals signing the closing documents to the transaction have the authority to do so. An LLC Operating Agreement is the only document that can definitely give that verification of authority.


If I have overlooked any other concerns that you may have, please accept my sincerest apologies. I will admit that my knowledge is limited as to the laws of your State. It does appear, however, that in order to dismiss the 2 members, you will need to meet with all members. Please note that a Revocation Power of Attorney document is available that can be presented to the 2 members.


I am hoping that this information has been helpful. If not, please let us know - as there are many specialists here that can further assist you.


Thank you kindly.


Bright Blessings.


Peace, Love & Happiness,


The Mystic Wave

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