Keeping Your Listing “Legal” – with a Certificate of Resolution
By G. B. “Nick” Nicholson, CBI
Did you obtain a corporate resolution when your seller signed your listing agreement? Do you know your commission can be at risk without that resolution?
Most of us are so glad to get a signature on the listing agreement that we immediately start marketing the business. How do we know if the business owner is authorized to sell the business? He might not even own the business. This condition is especially true with LLCs and Limited Partnerships. Who can speak for the LLC members and the partners?
Most of the time, we may not need the resolution. However, have you ever been close to closing and found out that the secretary of the corporation, the one who has to sign and approve all documents, is the owner’s ex-wife and she now lives in South America? Or that the owner’s father is the actual owner? Having the appropriate person sign the resolution should begin to uncover discrepancies.
We know for C and S corporations that the secretary signs documents. The person designated to sign for LLCs and Partnerships can vary. We brokers need to make sure that to follow the provisions of the underlying organization documents.
Former GABB affiliate and attorney Gary Whitaker drafted Certificates of Resolution for the GABB Forms Committee and GABB members. The forms are on the BBMS site under Forms and appear as:
- G102A1 Cert of Resolution C or S Corp
- G102A2 Cert of Resolution LLC
- G102A3 Cert of Resolution Partnership Limited
- G102A4 INSTRUCTIONS for Certificates of Resolution
A Certificates of Resolution should be a part of our Listing Agreement package. Use the Resolution when listing to make the closings go smoother and to protect your fee.
G. B. “Nick” Nicholson, CBI of Nicholson & Associates, Inc., has chaired the GABB Forms Committee.