[WSBARP] Execution on judgment

[Eric Nelsen]

Wait, maybe I am all wet, but as I read that statute, it is possible to foreclose on the member's transferable interest in the LLC, per RCW 25.15.256(2)<http://app.leg.wa.gov/RCW/default.aspx?cite=25.15&full=true#25.15.256>. Subsection 1 allows a charging order akin to a garnishment on the member's interest, and subsection 2 allows foreclosure and sale/seizure of the interest itself. Yes?

Admittedly the foreclosure only takes the debtor's "transferable interest," but if it's a single member LLC, if I represented a creditor I would foreclose on the 100% transferable interest. Then the creditor would be a 100% transferee, there would be no existing "members" with voting rights, and therefore the creditor has the right to vote to be admitted as a member within 90 days after the transfer, per RCW 25.15.265(4)<http://app.leg.wa.gov/RCW/default.aspx?cite=25.15&full=true#25.15.265>. The judgment creditor would thus effectively seize ownership and control of the LLC and its assets.

Do you think that would work?

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1417 31st Ave South
Seattle WA  98144-3909
phone 206-625-0092
fax 206-625-9040

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Robert Pampell
Sent: Monday, November 06, 2017 10:43 PM
To: 'WSBA Real Property Listserv'
Subject: Re: [WSBARP] Execution on judgement

No.  See RCW Sec. 25.15.256, esp. subsection (5).  Known as "charging order exclusivity," this subsection was added in the amendments effective 1/1/16.

While you are at it, your client should be advised, as should all LLC clients should be, that single member LLCs "make lousy asset protection vehicles", to quote a prominent national creditor rights/asset protection expert.  He was addressing the typical veil-piercing and alter ego flavor of asset protection, rather than the so-called "reverse veil-piercing" variety addressed by the section cited above.


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Robert Pampell, Attorney
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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Craig Gourley
Sent: Monday, November 06, 2017 3:41 PM
To: wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Execution on judgement

Listmates,
Client has a judgment against him personally and wants to acquire real property in a single member LLC.  I know the judgment does not attach directly to the real property.  My recollection is that the creditor can obtain a charging order against the LLC and any distributions to the member would go to the judgment creditor.  Can the judgment creditor execute against the personal property interest of the " membership" thereby taking ownership of the LLC and the property it contains?   Thanks in advance for your insight.

Gourley Law Group
Snohomish Escrow
The Exchange Connection

1002 10th Street / PO Box 1091
Snohomish, WA 98291

360.568.5065
360.568.8092  fax
Craig at glgmail.com<mailto:Craig at glgmail.com>

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