Legal Question in Business Law in Washington

I own 49% of an LLC. My partner (51%) recently sold her share. In the purchase agreement with the buyer she stipulates: all "rights" among the former members will terminate AND all deposits made to the business (accommodations) will be included in the sale price. She served as treasurer and has yet to hand over the financial records of the LLC to continuing members. We suspect she thinks this in one of the "rights" she wants to terminate. Also, my understanding is that deposits as assets and per our agreement assets and losses are distributed per our ownership share. The buyer was not acting as an agent of mine and has to authority to negotiate away my share of the assets - does she?


Asked on 7/20/10, 5:07 pm

2 Answers from Attorneys
Susan Beecher Susan L. Beecher, Atty at Law

I cannot give you a definitive answer without seeing your operating agreement, but if your operating agreement is the least bit normal, what this other member has done is completely incorrect. If there is no operating agreement, the statutory default will kick in and the other member is still way out of line.

Normally if a member sells her interest in an LLC, the buyer only purchases the right to receive profit distributions and NOTHING ELSE, unless the remaining members vote to allow the buyer to become a member. The departing member cannot "terminate" the remaining members' rights. This member has gone way off the tracks. I would recommend that you contact a business attorney to review the operating agreement (or absent an OA, your statutory rights) to learn what your rights are and then make them very clear to the seller and the buyer. This does not good at all.

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Answered on 7/20/10, 9:34 pm
Kevin B. Murphy Franchise Foundations, APC

The other attorney is right on point here. The departing member can't retroactively change or alter your rights. Consult with a good business attorney in your area for specific advice.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

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Answered on 7/21/10, 6:47 am


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