January 19th, 2021 at 11:57 am
Multiple Choice Question: Which one of the following statements is true? Pick the best answer:
A. The signatures are valid.
B. The signatures are invalid, and we should get the representative’s actual signatures.
C. The signatures could be valid, but we should get the representative’s actual signatures anyway.
D. The validity of the signatures depends on how the RCSD-B was completed.
Answer: The best answer is C. California law broadly construes what constitutes a “signature” for purposes of a valid purchase agreement. The signature “Kingdom, LLC,” could be deemed valid by a judge or arbitrator, especially if we can confirm that the authorized representative did the signing. However, we should nevertheless get the representative to sign his own name, because that’s what the drafters of the C.A.R. forms generally intended.
Although there is more than one acceptable way to complete the forms for an LLC, here are step-by-step instructions for what C.A.R. generally intended:
Step #1: Insert the name of the LLC as the “Buyer” in the RPA.
Step #2: Check the “Representative Capacity” box directly above the Buyer’s signature line on page 9 of the RPA. Only by checking that box will the representative’s initials and signatures be deemed to be in his representative capacity, not individual capacity, as set forth in paragraph 19 of the RPA.
Step #3: Attach an RCSD-B to the RPA. In paragraph 1.B. of the RCSD-B, check the “LLC” box. Also, directly below the signature line on the RCSD-B, insert the actual name of the authorized representative of the LLC. The authorized representative for an LLC is usually the managing member.
Step #4: Ask the authorized representative to insert his own initials and signatures in the RPA, RCSD-B, and related documents.
-Thank you to Diana Lam (Pasadena Transaction Coordinator) for suggesting this week’s legal tip.
-Happy Martin Luther King Jr. Day everyone! I have a dream.
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