When closing a transaction where the buyer or seller is an entity, such as a corporation, LLC or partnership, the title company will require documentation to that the entity is authorized to conduct business in Texas and to establish that the person signing on behalf of the entity has authority to do so. This documentation should be kept in the normal course of business for entities. The names of the forms may vary by entity type.
The title company will require a copy of the Certificate of Formation (regardless of the type of entity) and a copy of the By-Laws (corporation), Operating Agreement (LLC) or Partnership Agreement (partnership). The Certificate of Formation sets out the name and relevant parties who are affiliated with the entity. By-Laws, Operating Agreements and Partnership Agreements set forth the details of how the entity will operate. The Certificate of Formation must have been filed with the Texas Secretary of State and the entity must be in good standing with the Texas Comptroller’s Office. In addition, the title company will require a resolution from the corporation or LLC which indicates that the transaction has been approved by the party or parties authorized to approve such transactions in the By-Laws or Operating Agreement and which further designates the person or persons who are authorized to execute the documents to complete the transaction.
There are a number of companies that offer to help individuals incorporate by completing and filing the Certificate of Formation with the Secretary of State. The Secretary of State also allows for filing through its website. The Secretary of State does not – and companies offering filing services may not – provide By-Laws or Operating Agreements, so consultation with an attorney whenever you form an entity is always advisable.
If you would like to use a knowledgeable title company conveniently located in the Heights, please give us a call.
Fidelity National Title, 1512 Heights Blvd., Houston, TX 77008 (713) 529-8800.