Overview of the Series Limited Liability Company
The Series Limited Liability Company (“Series LLC”) is a fairly new type of business entity that individuals who invest in real property could benefit from. The Series LLC is not yet accepted in every state, however its popularity is growing. The first state to enact the Series LLC was Delaware in 1996 and to date the Series LLC is accepted in about fifteen (15) jurisdictions. The jurisdictions include: Delaware, Texas, Alabama, District of Columbia, Iowa, Kansas, Minnesota, Missouri, Montana, Nevada, North Dakota, Oklahoma, Tennessee, Utah and Wisconsin. You can consider the Series LLC similar to a beehive, with the Hive being “The Company” and each honeycomb being a Separate “Series or Cell.”
Series LLC (Limited Liability Company)
If properly formed (and operated with the appropriate formalities), the Series Limited Liability Company can ease the administrative burden of having to maintain multiple limited liability companies (each owning one parcel of real property for limited liability). Specifically, the Series LLC only requires one incorporation event and one annual report or franchise tax filing per year. Each individual cell is created by agreement of the original members and the members of the new cells. The Series LLC Articles of Incorporation or Certificate of Formation (in some states) and corporate documents must contain a Notice of Limitations provision. The language for such provision varies from state to state. For instance, in Texas, the Notice of Limitations provision is included in the Certificate of Formation and essentially says (not in verbatim) that any debts and/or liabilities of the Company is not the debt and/or liability of any separate Series/Cells and the debt and/or liabilities of a particular Series is not the debt and/or liability of any other Series or the Company generally. The specific language of the Notice of Limitations provision must come from the state statute.
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