Working with an LLC in Real Estate: What Tennessee Agents Need to Know
Whether your client is purchasing a downtown commercial building, a tract of land in Middle Tennessee, or a residential investment property, working with a Limited Liability Company (LLC) adds a layer of complexity that every real estate agent should understand.
What Is an LLC (and Why Clients Use One)?
An LLC is a legal business structure that separates personal assets from business liabilities. In real estate, buyers and sellers often use LLCs for:
Liability protection
Investment partnerships
Privacy (keeping individual names off public record)
Tax flexibility
You’ll see LLCs used across:
Residential investment properties
Commercial real estate
Vacant land and development deals
Confirm the LLC Exists and Is Active
In Tennessee, LLCs must be registered with the Secretary of State.
Before moving forward:
Verify the LLC is active and in good standing
Confirm the exact legal name (this must match the contract exactly)
Identify the authorized signer
Pro tip: Never assume the person you’re speaking with has the authority to sign.
Who Can Sign for the LLC?
This is one of the biggest pitfalls in LLC transactions. The signer must be authorized under the LLC’s governing documents:
Operating Agreement (most important)
Articles of Organization
Member or Manager resolutions
In Tennessee, LLCs can be:
Member-managed (owners sign)
Manager-managed (appointed manager signs)
If the wrong person signs? The contract may not be enforceable.
Required Documents (Especially for Closing)
For both buying and selling, title companies will typically require:
Operating Agreement
Articles of Organization
EIN confirmation
Resolution authorizing the transaction
Certificate of Good Standing (if needed)
These documents confirm:
✔ The LLC is valid
✔ The signer has authority
✔ The transaction is properly approved
Financing Considerations
LLC transactions can impact financing:
Residential Purchases:
Most traditional lenders require loans in an individual’s name
Some investors close in their personal name and transfer to an LLC after
Commercial & Land Purchases:
More flexibility for lending directly to the LLC
Lenders often require personal guarantees
Contract Tips for Agents
When writing offers or listing agreements:
Use the exact LLC name (no abbreviations or guesswork)
Add the signer as:
“John Smith, Manager of XYZ Holdings, LLC”Include contingencies if documents are pending
Clarify how the buyer intends to take title early
Selling Property from an LLC
When your seller is an LLC:
Confirm ownership via the vesting deed
Ensure all members/managers approve the sale (if required)
Watch for multiple-member approval issues
Delays often happen when one member is unavailable or disputes arise.
Land & Commercial Deals: Extra Considerations
For land and commercial transactions:
Check for survey, access, and easement issues
Confirm zoning aligns with the LLC’s intended use
Expect more detailed due diligence periods
Entity structure may impact development rights
Common Mistakes to Avoid
❌ Using the wrong LLC name
❌ Not verifying signing authority
❌ Waiting until closing to request documents
❌ Assuming residential rules apply to commercial deals
❌ Forgetting to loop in the title company early
Final Thoughts
Working with an LLC doesn’t have to be intimidating—but it does require attention to detail. When handled correctly, LLC transactions can be smooth, efficient, and incredibly beneficial for your clients. At the end of the day, your role is to:
✔ Ask the right questions early
✔ Verify everything
✔ Partner closely with your title company
Because every closing - LLC or not - should still feel like a celebration.
