LLC Law Blog - Page 14 of 17

Arizona Corporation Commission vs. Joseph Consenza & U.S. Media Team, LLC

The Arizona Corporation Commission issued the following press release on August 11, 2011:

” the Commission ordered Joseph Consenza of Phoenix to pay $205,000 in restitution and a $20,000 administrative penalty for defrauding seven investors in connection with the offer and sale of unregistered securities. The Commission found that, while not registered to offer and sell securities in Arizona, Consenza, who was the sole manager of Scottsdale-based U.S. Media Team, LLC, sold a promissory note to one investor and misused those funds to pay for personal expenses and to make payments to other individuals. Additionally, the Commission found that, while president and chief executive officer of Nevada-based Cell Wireless, Inc., Consenza offered and sold his company’s stock to six investors—five of whom were friends and family of Consenza’s initial investor—and represented that investor money would fund the operations and acquisitions of Cell Wireless, Inc. Further, the Commission found that, while promising sizable monetary returns, Consenza represented the risk level of the stock investment as low yet failed to inform investors that U.S. Media Team, LLC had defaulted on a prior merger agreement with Cell Wireless, Inc. In settling this matter, Consenza neither admitted nor denied the Commission findings, but agreed to the entry of the consent order. “

Richard Keyt2016-11-16T08:23:53-07:00August 12th, 2011|LLCs & Securities Laws|0 Comments

How Do I Acquire an Ownership Interest in an Arizona LLC as Separate Property?

Question: My spouse and I are Arizona residents. I formed an Arizona LLC by filing Articles of Organization that state that I am the sole member. Even though I was married when I formed the LLC, my spouse is not listed in the Articles of Organization as a member of my LLC. How do I prove that I am the sole owner of the LLC and that my spouse does not own one half of the LLC as community property?

Answer: You must have your spouse sign a written document (I call it a Disclaimer of Membership Interest in an Arizona Limited Liability Company) in which the non-owner spouse acknowledges that the non-owner spouse does not have any ownership interest in the owner spouse’s membership interest in the LLC.

Arizona Revised Statutes Section 25-211.A states:

“All property acquired by either husband or wife during the marriage is the community property of the husband and wife except for property that is:

1. Acquired by gift, devise or descent.

2. Acquired after service of a petition for dissolution of marriage, legal separation or annulment if the petition results in a decree of dissolution of marriage, legal separation or annulment.

The word “devise” means inheriting property through a will. The word “descent” means inheriting property from a relative who died without a will.

If you are a resident of Arizona who is married and you form an Arizona LLC or if you acquire a membership interest in an Arizona LLC while you are married your spouse will own a community property interest in the company with you EVEN IF HE/SHE IS NOT NAMED IN THE ARTICLES OF ORGANIZATION, AN OPERATING AGREEMENT OR ANY OTHER LLC DOCUMENT unless Section 25-211.A applies to make your ownership separate property. The legal consequence of owning as community property is that each spouse owns an undivided one half of the total amount of the membership interest. For example, if the spouse named in the Articles of Organization as a member owns 100% or 50% of the LLC, community property ownership means each spouse owns 50% and 25% respectively of the LLC. If you divorce, each spouse will be entitled to his/her one half membership interest or other property of equivalent value.

How to Create a Separate Property Ownership Interest in an Arizona LLC

If a married resident of Arizona wants to own his or her interest in an Arizona LLC as separate property rather jointly with the other spouse as community property, the owner spouse must obtain the signature of the non-owner spouse on a document in which the non-owner spouse disclaims any ownership of the membership interest in the LLC. If the non-owner spouse will not sign a disclaimer, the LLC will be owned equally by the two spouses as community property unless Section 25-211.A applies to make the LLC membership interest separate property.

Purchase Arizona LLC attorney Richard Keyt’s Disclaimer of Membership Interest in an Arizona Limited Liability Company

If you are a married Arizona resident and you want own your membership interest in an Arizona LLC as separate property, you need to purchase my Disclaimer of a Membership Interest in an Arizona Limited Liability Company form for $47. As soon as your credit card payment is approved, you will receive an email message with the disclaimer attached as an Abode pdf fillable form. Simply type the information into the blank spaces, print the document and present it to the non-owner spouse for signature.

Click to purchase the Disclaimer of a Membership Interest in an Arizona Limited Liability Company form

Richard Keyt2016-11-16T08:23:53-07:00August 8th, 2011|FAQs, How Do I|0 Comments

How Do I Amend the Articles of Organization of an Arizona LLC?

Question: One of the members of my member managed Arizona LLC has ceased to be a member. I know that Arizona LLC law requires that the LLC amend it Articles of Organization on file with the Arizona Corporation Commission. How do I amend the Articles of Organization?

Answer: Arizona Revised Statutes Section 29-3202 requires that a member of a member managed Arizona LLC must prepare Articles of Amendment to the Articles of Organization and file it with the Arizona Corporation Commission if a member named in the Articles of Organization on file with the ACC ceases to be a member or if the Articles of Organization does not name a person or entity who is a member. The same is true of of a manager managed Arizona LLC if:

A. A person or entity acquires 20% or more of the capital or profits of the company (for example: a 5% owner becomes a 20% owner); or

B. A person or entity named in the Articles of Organization ceases to own a 20% or greater interest in the capital or profits interest of the company.

See also my article called “When Must an Arizona LLC Amend Its Articles of Organization?“

Richard Keyt2021-01-02T16:23:12-07:00July 31st, 2011|FAQs, How Do I|0 Comments

When LLC Member May Be Held Personally Liable For Signing Loan Agreement

People form limited liability companies to limit their personal liability, but that goal will not be reached if a person signing legal documents for the LLC does not understand contracts facts of life. The general rule of LLC law is that if an LLC signs a contract only the LLC is legally bound and the members of the LLC are not liable. There are exceptions to this general rule and all members and managers who sign contracts for an LLC must understand the contract signature rules or they may find that by signing on the dotted line the signer becomes personally liable to satisfy the obligations of the LLC under the contract.

The case of Ubom v. Suntrust Bank, involved an attorney obtaining a line of credit for his law firm, a Maryland limited liability company. Mr. Ubom signed a loan agreement which contained a section for a personal guaranty. Ubom filled in the personal guaranty section with his own personal information including his social security number, personal address, employment information, and financial information. However, Ubom left the line blank which asked for the “Legal Name of the Guarantor.”

The loan agreement contained two lines for signatures. The agreement asked for the signature of the “applicant” and of the “guarantor.” Mr. Ubom signed in both places and after his name he wrote “Managing Attorney.” Unfortunately, Mr. Ubom’s law business went south and he failed to make the payments on the loan. The bank brought suit against both Mr. Ubom and his LLC.

The bank argued Mr. Ubom had personal liability, because the language of the loan agreement clearly provided Ubon personally guaranteed the loan. The language of the loan agreement stated:

To induce Bank to open the Account and extend credit to the applicant, or to renew or extend such other credit, each of the individuals signing this Application as a “Guarantor” (whether one or more, the “Guarantor”) hereby jointly and severally guarantee payment to Bank of all obligations and liabilities of the applicant of any nature whatsoever and whether currently existing or hereafter arising, including without limitation, all obligations and liabilities under this Application and/or the Account, and reasonable fees and expenses of Bank’s attorney(s) incurred in the collection of such obligations (collectively the “Obligations”).

Both the trial court and appellate court agreed with the bank, that this language clearly provided Ubom personally guaranteed the loan. The court found it insignificant that Ubom left blank the section asking for the “Legal Name of the Guarantor.” However, the court found it significant Ubom listed his personal financial information. The court, further, found it would be pointless to have Ubom sign a guaranty in his corporate capacity when the LLC was already obligated to repay the loan.

When signing any contract, the signer must read the contract to determine if the contract obligates the signer in addition to the LLC. If you are to sign a contract for your LLC and you are not sure if it will cause you to become personally obligated you should seek the advice of an attorney.

We can learn another important less from this case. According to Mr. Ubom, his banker told Ubom there was no personal guaranty on the loan. Ubom took the banker at his word. The court did not even take this conversation into account because of the personal guaranty found in the agreement and the clear language used to describe the guaranty. The moral of the story is “if it is not in writing, it never happened.”

Richard C. Keyt2016-11-16T08:23:54-07:00July 29th, 2011|Asset Protection, Lawsuits, Why People Need an LLC|0 Comments

How Do I Prepare a Notice of Publication for a New Arizona LLC?

Question: I know Arizona LLC law requires that I prepare and publish a Notice of Publication in the an Arizona Corporation Commission approved newspaper for three consecutive publications. What is a Notice of Publication and where can I get it?

Answer: Effective January 1, 2017, Arizona’s LLC law was modified to provide that a Notice of Publication must be published in a newspaper only if the LLC’s known place of business is outside Maricopa County or Pima County. The Notice of Publication is a document that every new LLC with a known place of business in a county other than Maricopa or Pima must prepare and deliver to an ACC approved newspaper in the county in which the LLC has its known place of business as stated in its Articles of Organization filed with the Arizona Corporation Commission. If you need a Notice of Publication, just copy and paste the below text into your word processor and edit it to add the information for your LLC.

Use the following form Notice of Publication for an LLC that is member managed.

Notice For Publication

ACC File Number: __________________

1. Articles of Organization have been filed in the office of the Arizona Corporation Commission for _________________________________________________, LLC

2. The address of the known place of business of the company is: _____________________________________________________.

3. The name and street address of the company’s agent for service of process are: _____________________________________________________.

4. Management of the limited liability company is reserved to the members.

5. The name(s) and address(es) of each Member of this limited liability company are: _____________________________________________________.

Use the following form Notice of Publication for an LLC that is member managed.

Use the following form Notice of Publication for an LLC that is manager managed.

Notice For Publication

ACC File Number: __________________

1. Articles of Organization have been filed in the office of the Arizona Corporation Commission for _________________________________________________, LLC

2. The address of the known place of business of the company is: _____________________________________________________.

3. The name and street address of the company’s agent for service of process are: _____________________________________________________.

4. Management of the limited liability company is vested in a manager or managers.

5. The name(s) and address(es) of each Manager of this limited liability company are: _____________________________________________________.

[Option 1: If no members owns 20% or more of the LLC use the following sentence and delete Option 2.]

6. No member of the limited liability company owns a twenty percent or greater interest in the capital or profits of this limited liability company.

[Option 2: If any member owns 20% or more of the LLC use the following sentence and delete Option 1.]

6. The name(s) and address(es) of each Member who owns a twenty percent or greater interest in the capital or profits of this limited liability company are: _____________________________________________________.

Richard Keyt2017-01-07T04:57:21-07:00July 29th, 2011|FAQs, Forming LLCs, How Do I|2 Comments

Sprinkles Cupcakes Files Trademark Lawsuit Against Pink Sprinkles

Arizona Republic: “Sprinkles Cupcakes, filed a federal trademark-infringement lawsuit Friday in Connecticut against a store named Pink Sprinkles. The lawsuit claims the similarity in names is likely to cause confusion in the marketplace.

Richard Keyt2011-07-19T15:14:59-07:00July 19th, 2011|Trademarks, Why People Need an LLC|0 Comments

Online Cash Advance Payday Loan

This is a very fast guide to everything that you need to know as to why you should get an online cash advance payday loan. This article will provide you with several tips on how you can immediately get the money that you are in urgent need of. You should be able to get the funds as soon as possible since payday loans involve very fast and simple steps.

The first thing that you need to do to find a good payday loan is to look for a website that has a good list of lenders. The purpose of doing this is so that you only have to fill out a single application form in return for more than one offer from various lenders who will look at your present money emergency. An online cash advance payday loan is simple for everyone if you do it this way because you do not have to waste time on filling out a few dozen application forms just hoping that one of them will be the perfect lender to borrow money from. This can help you to save a lot of time and help you to immediately get the money that you really need. This way, the lenders are the ones looking for you instead of you being the one looking for them.

The second thing you need to remember is that you have to fill out every field in the application form. This is not something that you want to skimp out on. The information that you get is what the lenders will use to determine whether they will approve you or not. When you leave out information from your application form, you are slowing down the procedures necessary for you to get approved. When you omit something important, you are hurting your chances of getting approved. So give the lender the information that they need right away.

The third thing for you to remember is that you should stay by the phone line that you put in the application form since they might have to call and ask you for added details. There are people who apply for the loans but do not stay by their phone lines so it takes longer for the loan to get processed. An online cash advance payday loan is easy as long as these tips are followed.

On the Net2019-06-15T07:03:09-07:00July 17th, 2011|Forming LLCs|0 Comments

Should I Form a Do-It-Myself Arizona Corporation?

Question: I am considering forming an Arizona corporation myself. All I have to do is complete the Arizona Corporation Commission’s three page fill in the blanks Articles of Incorporation and file it with the Arizona Corporation Commission. Why should I hire you to form my new corporation?

Answer: Wow! This is an actual question somebody asked me recently. The question always reminds me of another question, “would you perform surgery on yourself?” OK, it’s not quite the same thing, but there are a lot of reasons why people should not form corporations or limited liability companies themselves or use document preparers. Here are a few.

First and most important, the Arizona corporation is almost always obsolete and should rarely be used. Arizona corporate law does not give the shareholders charging order protection unlike Arizona LLC law that provides that the sole remedy of a creditor who gets a judgment against a member of an Arizona LLC is to serve a charging order on the LLC. The legal significance of the difference is that if a creditor gets a judgment against a stockholder of an Arizona corporation, the creditor can sell the stock at an auction and it is lost forever. However, if the creditor gets a judgment against a member of an Arizona LLC, the creditor can get a charging order, but cannot force a sale of the membership interest in the LLC. Bottom line: If a you own stock in an Arizona corporation and a creditor gets a judgment against you, you will probably lose your investment in the stock forever. If you are a member in an Arizona LLC and somebody gets a judgment against you, Arizona’s LLC law prevents the loss of your investment in the company.

Arizona corporations must file an annual report with the Arizona Corporation Commission and pay an annual fee of $45. Arizona LLCs do not file an annual report with the ACC or pay it an annual fee.

If an Arizona corporation fails to file its annual report, the Arizona Corporation Commission will terminate its existence. Let me say that again slower. T h e A C C w i l l k i l l the c o r p o r a t i o n! What do you suppose happens to the corporate shield provided by an Arizona corporation when it dies? It evaporates! When the ACC revokes the charter of an Arizona corporation because it did not file an annual report, the legal significance of the revocation is that the shareholders no longer have a corporation – they have a common law Arizona general partnership and every one of them is 100 percent liable for everything that goes wrong. If you have an Arizona LLC there is no annual report so you cannot forget to file it and the ACC cannot terminate your company for failing to file the annual report. If you think revocations are rare, think again. For its fiscal year ending June 30, 2011, the ACC revoked the existence of 18,342 Arizona corporations – that’s 10% of all Arizona corporations.

If you insist on forming your own corporation, the before you pull the trigger, do your self a favor and read the read “How To Incorporate In Arizona.”

For more reasons why you should not form an Arizona corporation, read my articles called “Best Arizona Entity to Form,” “LLC vs. Corporation” and “Two Phases in the Life of an LLC.”

Having said the above, if anybody insists on forming an Arizona corporation, I am happy to oblige that person. I do form Arizona corporations, but it happens less and less as time goes by and more and more people realize that the limited liability company is the entity of choice in Arizona.

Richard Keyt2016-11-16T08:23:54-07:00July 17th, 2011|Asset Protection, FAQs, Forming LLCs|0 Comments

What are the Differences Between an Arizona PLLC vs LLC?

Question: Arizona pllc vs llc: What are the differences between an Arizona professional limited liability company and an Arizona limited liability company and when would somebody form a PLLC instead of an LLC?

Answer: Only three percent of Arizona LLCs are PLLCs. Few people are required to form an Arizona PLLC.

Arizona Revised Statutes Section 29-3401.4 states: “‘Professional Limited Liability company’ means a limited liability company organized under this Chapter for purposes that include rendering one or more categories of professional services.”

This means that an Arizona PLLC is an LLC that provides professional services that may be performed only by a person who is licensed by a limited number of professions in Arizona such as medical doctors, certified public accountants, attorneys and real estate agents.

The following provisions apply only to AZ PLLCs:

1. The Articles of Organization must state that the company is a professional limited liability company.

2. The Articles of Organization must state the professional service or services that the company is organized to provide.

3. The name of the PLLC shall contain the words “professional limited liability company” or the abbreviations “P.L.L.C.”, “P.L.C.”, “PLLC” or “PLC”, in uppercase or lowercase letters.

4. A professional limited liability company may issue membership interests only to:

a. Individuals who are licensed by law in Arizona or another state to render a professional service described in the articles of organization of the professional limited liability company. The following are not violations of this restriction: i) Any community interest of an unlicensed spouse in the membership interest issued to a licensed spouse in which the unlicensed spouse with a community interest in the membership interest does not have the right to vote the membership interest, or (ii) Issuance of a membership interest to a trust established for the benefit of a licensed individual or members of the licensed individual’s immediate family in which the licensed individual has the right to vote the membership interest and the trust and the members of the licensed individual’s immediate family do not have the right to vote the membership interest.

b. General partnerships, registered limited liability partnerships, other partnerships and joint ventures, domestic or foreign, in which all of the partners are licensed persons with respect to the profession to be conducted by the professional limited liability company and in which at least one partner is authorized by law in this state to render a professional service described in the articles of organization of the professional limited liability company.

c. Professional corporations, professional limited liability companies and other persons, domestic or foreign, authorized by law in Arizona to render a professional service described by the articles of organization of the professional limited liability company.

d. Other persons, if after the issuance of voting membership interests, the other persons in the aggregate do not hold more than forty-nine per cent of the membership interests entitled to vote for the election of officers and managers of the professional limited liability company, unless a greater or lesser percentage is prescribed by the board.

Membership interests and rights or options to purchase membership interests of a professional limited liability company that are held by persons described in 4, a, b & c may be transferred or pledged, whether voluntarily, involuntarily, by operation of law, by court judgment or otherwise, only to persons qualified under subsection B to be issued voting membership interests and to the professional limited liability company. Voting membership interests and rights or options to purchase voting membership interests of a professional limited liability company that are held by persons described in subsection B, paragraph 4 may be transferred or pledged, whether voluntarily, involuntarily, by operation of law, by court judgment or otherwise, only to persons who are qualified under subsection B, to be issued voting membership interests and to the professional limited liability company.

To my knowledge, the only profession that requires its licensed professionals to form an Arizona PLLC is the real estate sales agent profession (not real estate brokers). Arizona realtors do not have to form a professional corporation or a professional LLC unless they want their real estate commission paid by their broker broker to an entity rather than directly to them. Doctors, lawyers and accountants in the past were required to form Arizona professional corporations or Arizona PLLCs, but not currently.

The Arizona Department of Real Estate requires the following of real estate agent’s PLLCs:

The name of the PLLC or PC be the name of the professional as it appears on the real estate agent’s license, and

The Professional Corporation or Professional Limited Liability Company Name, through and on behalf of which a salesperson or broker acts, shall consist of only the full or last name(s) of its shareholder(s) or member(s), and contain the words “Professional Corporation,” “Professional Limited Liability Company”, as applicable, or the abbreviations authorized under Arizona Revised Statutes Sections 10-2215 or 29-4106, as applicable, to reflect that it is a Professional Corporation or Professional Limited Liability Company, and shall reflect whether it comprises one or more licensees (single or plural as in John Smith, P.C. or Smith & Smith, P.C.).

For a designated broker, PC/PLLC name shall only consist of the broker’s full or last name, and words or abbreviation to indicate it is a PC or PLLC.

A PC or PLLC shall not have a fictitious name.

The Articles of Organization of a PLLC formed for a real estate agent contain the following statement: “The sole purpose of the Professional Corporation (or Professional Limited Liability Company) is to render professional real estate services.”

Read “Can an Arizona LLC Become a PLLC & an Arizona PLLC Become an LLC?“

Richard Keyt2021-06-04T13:41:47-07:00July 12th, 2011|FAQs, PLLCs|27 Comments

How Do I Check the Arizona Corporation Commission for the Status of My Arizona LLC?

Question: How can I check the records of the Arizona Corporation Commission to see if my new LLC’s Articles of Organization have been approved or if the information listed for the company and its members and managers is correct?

Answer: Search for the LLC on the Arizona Corporation Commission’s name search database. If any LLC information displayed is incorrect, a member (if member managed) or a manager (if manager managed) must take action to correct the bad information.

If an address of the company or the statutory agent is wrong, file a Statement of Change of Known Place of Business Address or Statutory Agent with the ACC. If the address of a member or manager is wrong file a Statement of Change of Manager or Member Addresses with the ACC.

A member (if member managed) or a manager (if manager managed) of an LLC must file an Articles of Amendment to the Articles of Organization to correct any of the following errors:

The LLC is member managed and the ACC’s records show a person or entity that is no longer a member or does not show a person or entity that is a member.

The LLC is manager managed and the ACC’s records shows a person or entity: (i) that is no longer a member, or (ii) who no longer owns 20% or more of the LLC

The LLC is manager managed and the ACC’s records do not show a person or entity who owns 20% or more of the LLC.

The LLC is manager managed and the ACC’s records show a person or entity that is no longer a manager or does not show a person or entity that is a manager.

Richard Keyt2019-07-04T10:42:12-07:00July 11th, 2011|FAQs, How Do I|0 Comments

How Do I Open a Bank Account for an LLC?

Question: I just formed by new Arizona limited liability company. I now need to open a bank account in the name of the LLC. How do I open the account?

Answer: Tell the bank you want to open a bank account in the name of the LLC. Give the following to the bank officer:

A copy of the LLC’s Articles of Organization with either the Arizona Corporation Commission’s “received” stamp or its “filed” stamp. Most banks will accept the Articles of Organization before it has been approved by the ACC. A few, however, require a copy of the Articles of Organization approved by the ACC with the “filed” stamp on it.

The LLC’s federal employer identification number (EIN). To learn how to get an EIN for an LLC, read my article called “How Do I Get a Federal Employer Identification Number for an LLC?“

A few banks also require a copy of the LLC’s Operating Agreement. If you do not have an Operating Agreement for your Arizona LLC hire me to prepare a custom Operating Agreement by completing and submitting our online Operation Agreement Questionnaire.

If you want to open a bank account immediately after submitting the Articles of Organization to the ACC, you must hand deliver two copies of the Articles of Organization to the ACC. Give one copy to the ACC and ask the ACC clerk to stamp the copy with the ACC received stamp and return it to you. Use this copy to open the LLC’s bank account. If you do not follow this procedure, you will not be able to open the LLC’s bank account until you receive the approved Articles of Organization from the ACC one to four week after the submission date. Check the upper right hand corner of this website for the date of documents filed on an expedited basis that are being reviewed by the ACC.

I recommend that you get an EIN for your LLC. Banks will allow you to open a bank account in the name of the LLC if you give the bank your social security number. In this age of identity theft, it is better to get an EIN for the LLC so you do not have to give out your SSAN to banks or others from time to time.

Richard Keyt2019-07-04T07:55:38-07:00July 11th, 2011|FAQs, How Do I|4 Comments

Las Vegas Revolver Saloon Sues Scottsdale’s Revolver Lounge for Trademark Infringement

Arizona Republic: “The suit, filed Thursday [July 7, 2011] in U.S. District Court, names Arizona-based Revolver, LLC, as a defendant. Court documents say that Scottsdale’s Revolver Lounge is infringing on trademark rights of Revolver Saloon.”

The plaintiff is NP Opco, LLC, a Nevada limited liability company, holder of a federally registered service mark for the word mark “Revolver Saloon,” in the goods and services classes IC 041 and US 100, 101 and 107 for night clubs. The trademark registration 3862054 was granted on April 27, 2010. The mark was first used in commerce on February 5, 2010.

Business owners can learn several lessons from this trademark infringement lawsuit:

Trademark law exists

Ignorance of trademark law or failing to consider trademark law can be harmful to your company’s economic health

Before adopting a trademark or a service mark, conduct a search to determine if somebody else holds trademark rights that your mark might infringe

Consult with an experienced trademark lawyer. Trademark law is not an area of law for do-it-yourselfers.

If your company has one or more trademarks or service marks that is uses in interstate commerce, it should register the mark(s) with the U.S. Patent & Trademark office.

Richard Keyt2018-10-07T10:33:12-07:00July 10th, 2011|Lawsuits, Why People Need an LLC|0 Comments

Can an Arizona LLC Have Officers Such as a President?

Question: Can an Arizona limited liability company have a President, Vice President, Chief Executive Officer or personnel with other titles?

Answer: Yes. Arizona’s statutes that authorize the creation of LLCs do not restrict the titles a company may give to its employees or personnel.

Technically, corporations have presidents and CEO, but Arizona LLCs do not. Arizona law mentions only three types of people or entities associated with an AZ LLC: members (owners), managers (equivalent to the president of a corporation) and noneconomic members (neither a member nor a manager, but a special character that is not defined in Arizona law).

You LLC has Articles of Organization. Corporations have Articles of Incorporation.

Arizona law provides for two types of LLCs: member managed and manager managed. Only member managed AZ LLCs have managing members. In fact, AZ law provides that all members of a member managed LLC are managing members and have management power.

If you have a manager managed AZ LLC and you sign as manager on behalf of the LLC, you are complying with Arizona law and clearly indicating to the other party the capacity in which you sign the document. This is important to avoid personal liability.

Arizona law does not say that your LLC cannot have a president or a CEO. It’s your company and as the controlling member you can create any LLC office you desire and call it whatever you want to call it. The problems with calling somebody the President of your AZ LLC are:

1. People who understand Arizona law will not accept the signature of a person whose title is President because they know that a member must sign for a member managed Arizona LLC and a manager must sign for a manager managed Arizona LLC. Prudent people will look up the LLC on the Arizona Corporation Commission’s website to see if the LLC is member managed or manager managed and insist that the contract be signed by the appropriate person named in the LLC’s Articles of Organization on file with the Arizona Corporation Commission.

2. There is a risk that if the contract results in a lawsuit, the other party could claim they thought they were dealing with a corporation rather than an LLC and therefore your company would be required to prove it complied with AZ corporate law rather than AZ LLC law to get the protection afforded by Arizona law to the owners of those types of entities.

3. The other party to the contract might also claim the signer misrepresented the signer’s capacity to sign the contract.

Read about the perils of signing contracts on behalf of an entity in my article called “President of Corporation Personally Liable for Signing Contract.”

I do not recommend mixing corporate terms with LLC terms so you avoid the problems mentions above.

On the Net2016-11-16T08:23:54-07:00July 9th, 2011|FAQs, LLCs & Corporations, Operating LLCs|2 Comments

Should I Form an LLC before or after Acquiring Real Estate?

Question: I intend to purchase an Arizona real estate property for investment in the near future. My plan is to rent the home or I might fix it and then flip it. I know I need to put the property into a limited liability company to limit my liability and protect my life savings from things that could go wrong with the property. Should I form the LLC before or after the acquisition?

Answer: Either way is fine, but you can save yourself some administrative tasks and some money by forming the LLC first so it can be the grantee on the deed that conveys title. The important fact is that you make sure the LLC holds the title so that it will be the defendant in any lawsuit that arises from the property.

The benefits of forming the LLC first so it can take title are:

1. The LLC is the original owner named in the deed from the transferring property owner.

2. The LLC can be the insured on the property and liability insurance policies from day one.

3. The LLC can be named as the insured on the title insurance policy if you purchase title insurance at the time of acquisition, which as a real estate lawyer I recommend you always do.

If you purchase the land in your name first instead of in the name of your LLC then you must do the following after you form the LLC and acquire title:

1. Prepare a deed, sign it and record it in the county where the real estate is located.

2. Cancel the property and liability insurance policy and get a new policy that names the LLC as the insured.

3. Get an endorsement on the title insurance policy that names the LLC as an additional insured.

Warning: Do not sign and record a deed to the LLC before it is created. You cannot put the title in the name of the LLC unless it exists at the time the title is transferred. A deed to a nonexistent entity is void and creates a cloud on the title.

Richard Keyt2016-11-16T08:23:54-07:00July 7th, 2011|FAQs, Forming LLCs, Real Estate Issues|0 Comments

LLCs Must be Represented in Court by an Attorney

A State of Washington appellate court ruled that a single member LLC must be represented in a court proceeding by a lawyer rather than the sole member of the LLC. The court said:

A limited liability company (LLC) must be represented by a lawyer in order to litigate. This is simply an application of the general rule prohibiting laypersons from representing other persons or entities in court proceedings. Because a layperson does not have a lawyer’s professional skills or ethical responsibilities, such representation imposes undue burdens on opposing parties and the courts. These considerations are just as important when the LLC has only one owner. We affirm an order requiring the appellant LLC to obtain legal representation in order to pursue its claim”

Arizona LLCs, corporations and partnerships must also be represented in court by a licensed Arizona attorney.

The case is Dutch Village Mall vs. Raymond J. Pelletti, Washington Court of Appeal, Division One, July 5, 2011.

Richard Keyt2016-11-16T08:23:55-07:00July 6th, 2011|Lawsuits|5 Comments

How to Transfer Land to an Arizona LLC

Question: How do I transfer land to an Arizona LLC?

Answer: You may have formed a limited liability company to help protect you from things that might go wrong with property you own. For the LLC to protect your personal assets from liability, it must hold the title to the land. To get real estate into a limited liability company, the current owners must sign a deed that conveys the property to the limited liability company and record the deed in the county where the real property is located. If you acquired title to the property in a transaction that went through an escrow company, ask the escrow company if it will prepare the deed. Sometimes the escrow company will prepare the deed for you for no charge or a nominal amount.

Some other issues to consider are:

1. If you transfer the title to the LLC, ask the title insurance company that issued you the title insurance policy on the land to give an endorsement to the title insurance policy as of the date the policy was issued that names the LLC as an additional insured on the title policy. The cost for this type of endorsement is typically $75. If you do not get the endorsement, the LLC will not have title insurance on the land unless it purchases a new policy.

2. Coordinate with the insurance companies that insure the property and arrange to get a new policy or policies of insurance that name the LLC as the insured. Alternatively, you could add the LLC as an additional insured on the existing insurance policy or policies. If you purchased fire insurance that names you as the insured and the home is damaged or destroyed in a fire, the insurance company will probably deny coverage because you are not the owner of the property. Make sure you have written evidence from the insurance company that says the LLC is covered as of the date the real estate is transferred to the LLC.

3. Consult with your insurance agent and make sure that you and your LLC are covered with all appropriate types of insurance that have high amounts of coverage. Examples of such insurance would be home owners and liability insurance, however the types of insurance you need depends in part on the actual business and/or activities of the LLC. An LLC that owns a home leased to a family needs different insurance types and coverages than an LLC that operates an assisted living facility.

Richard Keyt2019-06-15T11:00:44-07:00July 4th, 2011|Ask the KEYTLaw Girl, FAQs, Operating LLCs, Real Estate Issues|0 Comments

Why You Should Form an LLC?

Question: I understand that if I form a limited liability company to operate my business and I am the only person who provides services on behalf of the business that I can be sued and be liable for my acts or omissions that cause harm to third parties. Instead of forming an LLC, can’t I just load up on insurance and not form an LLC to operate my business?

Answer: You could, but I think that would be a costly mistake. When you operate a business, commercial insurance is always your first line of defense. Your business should never operate without appropriate insurance coverage. Consult with several experienced business insurance agents and get their advice as to the type of insurance and the coverage amounts that are appropriate for your particular business. Always buy as much insurance as you can afford of the type that is appropriate for your specific type of business.

You operate a business through a limited liability company because it is your second line of defense against things that can go wrong with the business. What if you have insurance and the insurance coverage is denied? What if a plaintiff gets a judgment that exceeds the amount of insurance coverage? If you don’t form an LLC to operate your business and a plaintiff gets a judgment that exceeds the amount of your insurance coverage against you as the owner/defendant, all of your personal assets are at risk.

Fundamental Fact of Business Life: Without an LLC to operate your business, you are 100% liable for every thing that goes wrong. Do you really want to be in that position and have all of your life savings at risk? It’s hard to predict how liability may arise, but if you operate the business through an LLC, the general rule is the owners are not liable for the debts or obligations of the LLC. Wouldn’t you rather start from the position that you are not liable for anything (except your own acts and omissions) instead of the position that you are liable for everything?

Bottom Line: I believe it is foolish to operate an Arizona business without adequate insurance coverage and without operating the business through a limited liability company or a corporation.

Yes, I form Arizona limited liability companies. I’ve formed 9,300+ AZ LLCs. For the reasons why so many people hire me to form LLCs, see the contents of our Bronze, Silver & Gold LLC formation packages.”

KEYTLaw Girl Shows What Is In Every LLC Portfolio

When we form a Silver or Gold Arizona LLC we put all of the LLC’s documents in a beautiful red Arizona Limited Liability Company portfolio with the documents organized behind tabs. Every LLC gets our custom drafted Articles of Organization, organizational resolutions signed by the members, the charging order enhanced Operating Agreement, the 170 page Arizona LLC Operations Manual ebook customized for the LLC, and a numbered membership certificate for each member.

We Answer LLC Formation Questions for Free

If you have questions about forming an Arizona LLC, contact Arizona LLC lawyers Richard Keyt (480-664-7478) or Richard C. Keyt (480-664-7472). We do not charge for entity formation related questions.

Two Easy Ways to Hire Richard Keyt to Form Your Arizona LLC

To learn about what is included in each of our three LLC formation packages see our $497 Bronze, $797 Silver & $1,297 Gold LLC formation packages comparison page.

We’ve made it very easy to hire Richard Keyt who has formed 9,300+ to form your new Arizona LLC. It’s a simple 5 – 10 minute process. To hire Richard to form your new LLC select one of the following two options:

Option 1 – Telephone

Call any of the following KEYTLaw people and give your LLC and credit card information over the phone:

Richard Keyt – 480-664-7478
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KEYTLaw legal assistant Amanda Duran - 480-664-7846

Option 2: Online – Available 24/7

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Richard Keyt2023-10-24T10:07:28-07:00July 3rd, 2011|Asset Protection, FAQs, Forming LLCs, Why People Need an LLC|0 Comments

Graduate Essay Structure

Students on various educational levels are faced with professor’s expectations. These expectations push the students to achieve more and grab as much information about life and their professional background as possible. The same applies to the essay writing as they are supposed to meet teachers’ expectations as well.

The studies do also include the world contest of development and progress and students are required to participate in those as well. The students at the graduate level are required to perform on higher level and to cope with a greater number of assignments, courseworks, dissertation writing, etc. These assignments include graduate essays, graduate papers, research papers and term papers. One of the reasons that students are being assigned a greater number of papers to write is to teach them to manage and value their time. Pushing to their limits will definitely bring certain results that are going to be much appreciated in the workplace or real life. Otherwise, students may never got to know what they are truly capable of.

RESPONSIBLE, SERIOUS, ORGANIZED AND CAREFUL. Your graduate essay leads to certain thoughts about you as a professional, student and a person. If you make foolish mistakes and have given yourself less time to proofread your writings, a line of certain conclusions may be done about you. In case if reader finds mistakes, you are considered to be irresponsible, careless, not serious enough and disorganized.
BE PRECISE. By being precise we mean that you must put much effort into avoiding careless errors in your graduate essay structure and overall writing. Keep in mind, if you fail to do that your graduate essay will affect how you are perceived as a graduate student.
THOROUGH PROOFREADING. You must include more time for proofreading in order to see if any errors are made including both grammar and punctuation mistakes.
CAREFULL USE OF TERMINOLOGY. Make sure to clarify if you are using the right terms. You must have clear understanding of what particular terminology mean. See if you can figure out the difference “personal statement” and “personal statement”.

On the Net2017-07-02T22:29:01-07:00July 2nd, 2011|FAQs|0 Comments

Is Property Acquired During an Arizona Divorce Community Property or Separate Property?

Question: An Arizona resident in the process of getting a divorce wants to form an Arizona limited liability company. If he/she forms an Arizona LLC before his/her divorce is final, will the spouse own a community property interest in the new LLC?

Answer: It depends. Arizona law defines community property as all property acquired by either spouse during the marriage. There are two exceptions to this rule.

First, community property does not include property acquired during the marriage by gift or inheritance.

Second, community property does not include property acquired AFTER service of a petition for divorce, legal separation or annulment if the petition results in a decree of divorce, legal separation or annulment.

This means that if somebody gives money or property only to one spouse, the property is separate property unless the recipient changes the separate property to community property. Likewise, if a parent dies and leaves money or property to a married child, the money or property is separate property unless the recipient changes the separate property to community property.

Separate property can be changed to community property and community property can be changed to separate property. It is best to document changes in the character of property with a written document such as a deed. Married people who have separate property and who want to keep it as separate property must take care not to change the separate property into community property. Separate property can be changed to community property if it is titled in the name of both spouses, or if it is money, deposited in a joint bank account. Also, if community assets such as wages or salary are used to benefit separate property, it can cause some or all of the separate property to become community property. For example, if a man inherits a home from his parents and uses some of his salary, which is community property, to pay the mortgage or make improvements to the home, a part of the home will become community property.

Now, back to the question. If Spouse 1 is an Arizona resident and forms a new Arizona LLC after service of a petition for divorce on Spouse 2 and if the petition results in a decree of divorce, Spouse 1 is the sole owner of the interest in the LLC as separate property. Otherwise, Spouse 1’s interest in the LLC is deemed to be community property.

I recommend that an Arizona resident who is married and wants to ensure that he or she will be the sole owner of an interest in a new Arizona LLC should not rely on the divorce becoming final, but should get the non-owner spouse to sign a document in which the non-owner spouse disclaims any interest in the LLC. Of course, if the non-owner spouse will not sign the disclaimer, the divorce must become final for the owner spouse to own one hundred percent of the new LLC.

Richard Keyt2019-06-15T11:15:42-07:00July 1st, 2011|Ask the KEYTLaw Girl, FAQs|2 Comments

How Do I Check if a Name is Available for a New Arizona LLC?

Question: I want to form a new Arizona LLC. I know that the Arizona Corporation Commission will reject the Articles of Organization if the name of my new LLC is exactly the same as an existing Arizona LLC, corporation, limited partnership or tradename. How do I check the records of the ACC to see if my desired name is available?

Answer: Click on ACC Name Availability Database and then follow the instructions. Caution: If a name is available to use for your new Arizona LLC, it does not mean that your LLC’s use of the name is safe from a claim of trademark infringement. See for example “Las Vegas Revolver Saloon Sues Scottsdale’s Revolver Lounge for Trademark Infringement.”

Note: People sometimes mistakenly search for arizona secretary of state business entity search when they want to know if a name is available for an Arizona LLC or corporation. Do not search the Arizona Secretary of State’s website for LLC or corporation names because it is the Arizona Corporation Commission that determines is a name is available for an Arizona LLC or corporation.

Hire Us to Form an LLC

We’ve formed 9,300+ and have 373 five star reviews on Google and Birdeye because people love our low-priced LLC formation services. See the prices and contents of our three LLC packages. To hire us submit our online LLC formation questionnaire.

For free answers to questions about forming and operating Arizona LLCs and PLLCs call LLC attorneys Richard Keyt (the father) at 480-664-7478 or his son Richard C. Keyt at 480-664-7472.

Richard Keyt2023-10-24T10:00:09-07:00July 1st, 2011|FAQs, How Do I|0 Comments