[WSBARP] title in defunct LLC

[Eric Nelsen]

I think that is the solution: a deed from grantor LLC A to grantee LLC B, and the signing grantor is LLC B as sole member of LLC A.

John, I don't think there is a statutory or other legal limitation, so much as practical ones caused by passage of time and loss of needed evidence to establish who the members of LLC A are/were.

Rod-In a scenario where there was a transfer of ownership interests in LLC A to LLC B, but it's years past and there is no longer a written record of the transfer and LLC A is dissolved, I would likely name LLC A and its members/owners as defendants, as all of those entities and persons have a potential interest in the property. I'd serve the LLC under RCW 23.95.450, which offers various options up to and including serving the Secretary of State in lieu of any registered agent, place of business, or other responsible person.

The key thing with dissolved entities is that "dissolution" does not mean they're not sue-able. There are just in a "winding up" phase where they aren't doing any active business. The members/owners (or maybe the manager) have specific fiduciary duties to wind up properly, so I would name them as defendants and, if necessary, assert a breach of fiduciary duty for failure to properly wind up. But that step might not be needed to quiet title, depending on the basis of LLC B's assertion of ownership of the real property.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of John McCrady
Sent: Tuesday, February 18, 2025 9:44 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] title in defunct LLC

My take would be, assuming the membership interest in LLC A was validly transferred per the RCW and the LLC Agreement, LLC B is still the sole member of LLC A.  If LLCA was a member managed LLC, then LLC A could transfer the real estate "in the process of winding up its affairs",  by an deed executed by "LLC B, as sole member of LLC A, a dissolved Washington Limited Liability Company in the process of winding up its affairs, and in distribution of a forgotten Limited Liability Company asset."

I am not aware of any time limitation on a dissolved LLC's ability to distribute its assets.  But I would be very interested in hearing about it.


John McCrady
Counsel
Puget Sound Title Company
5350 Orchard Street West
University Place WA 98467
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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Craig Gourley
Sent: Tuesday, February 18, 2025 9:36 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] title in defunct LLC

Hi Eric.  LLC A was owned by a corporation that assigned all of their membership interest in LLC A to LLC B. LLC B never changed the info at the SOS office and let it be administratively dissolved.  So my thinking is that maybe defunct LLC A is still owned by the corporation so the successor is the corporation.  Or maybe delivery of the assignment document alone was sufficient to transfer the membership interest and therefore LLC B is successor to the defunct LLC A.  I have never had the need to research the mechanics of membership transfer and if delivery of an assignment alone is sufficient.    Thanks, Craig

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Eric Nelsen
Sent: Tuesday, February 18, 2025 9:00 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] title in defunct LLC

I'm not sure I understand the transfer of "membership" and I think that has some impact on the answer. What is it exactly that was transferred from LLC A to LLC B?

Generally speaking, if a corporate entity dissolves and its assets are not properly wound up and distributed, the owners of the entity succeed to direct ownership as tenants in common. For real property, that's obviously off-record, but the whole matter could maybe be handled with a friendly quiet title where the successors to LLC A stipulate as defendants to quiet title in plaintiff LLC B.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Craig Gourley
Sent: Tuesday, February 18, 2025 8:28 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] title in defunct LLC

Listmates,   We have a situation where LLC A holds title to a property.  Membership in LLC A was transferred to LLC B 15 years ago but never actually changed at the Secretary of States office.  LLC B presumed they held actual title and has been reporting for taxes under LLC B.  LLC A ( which is in actual title) was dissolved 14 years ago.  We need to get title to the property into LLC B or resurrect LLC A and make LLC B the member. Any suggestions?   No excise was due on the initial membership transfer.

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