F Executing Documents · 2012 Texas Land Title Institute: Executing Documents Page 1 of 22 NOVEL ISSUES IN EXECUTING DOCUMENTS Notary Requirements, Foreign Individuals, International

Novel Issues in

Executing Documents: Notary Requirements, Foreign Individuals,

International Entities, Series LLC’s

2012 Texas Land Title Institute

Richard Melamed Harbert Huvard Jacobs Wadler LLP, Houston

Richard Melamed

Harberg*Huvard*Jacobs*Wadler, LLP

2100 West Loop South

Suite 1100

Houston, Texas 77027

Phone: 713-572-7000

Email: [email protected]

www.richardmelamed.com

Richard Melamed is a native Houstonian who has practiced law in Harris County for over 30 years. His practice includes representation of clients in real estate and business transactions, as well as defending clients and clearing title issues in real estate litigation in courts around the state. He has been very active in recent years in cases involving mortgage fraud. He has held licenses as a mortgage broker, a real estate salesman, and is a former fee attorney. Mr. Melamed is a partner with the law firm of Harberg Huvard Jacobs Wadler, LLP, a boutique real estate firm in Houston specializing in representing lenders, borrowers, developers, and real estate brokers in various real estate transactions and litigation. The firm has niche expertise in restaurant startups, and the sales of ongoing businesses, and mixed use developments. The firm also operates a fee title closing office for American Title. Mr. Melamed is a certified, credentialed mediator specializing in real estate and business disputes. He has successfully mediated over 500 cases, with a high percentage rate of settlements. He also acts as a consulting and testifying expert in cases involving title and title insurance issues.

• Board Certified in Residential, Commercial, and Farm & Ranch Real Estate by the

Texas Board of Legal Specialization

• A-V Rated by Martindale-Hubbell;

• Listed: Bar Registry of Preeminent Lawyers

• Recognized by Super Lawyers magazine as one of the Top 100 lawyers in the Houston

Region;

• Named in the Super Lawyer’s 2011 Business Addition as the only solo practitioner in

Texas to be listed under the “Top Law Firms in Construction & Real Estate”;

• Listed: Who’s Who in American Law;

• Recognized by Inside Houston and H Magazines as one of the Best Real Estate Lawyers

in Houston

• Member, State Bar of Texas Real Estate Forms Committee

• Member, State Bar of Texas Real Estate, Probate and Trust Council

2012 Texas Land Title Institute: Executing Documents Page 1 of 22

NOVEL ISSUES IN EXECUTING DOCUMENTS

Notary Requirements, Foreign Individuals, International Entities, Series LLCs

1. Notaries

A. US Notaries: A notary is a public officer constituted by law to serve the public in non-contentious matters usually concerned with wills, estates, deeds, powers-of-attorney, and foreign and international business. A notary's main functions are to administer oaths and affirmations, take affidavits and statutory declarations, witness and authenticate the execution of certain classes of documents, take acknowledgements of deeds and other conveyances, protest notes and bills of exchange, provide notice of foreign drafts, prepare marine protests in cases of damage, provide exemplifications and notarial copies, and perform certain other official acts depending on the jurisdiction. Any such act is known as a notarization.

An individual seeking to become a Notary Public in the state of Texas must be at least 18 years old to submit an application. He must also be a resident of the state of Texas. The Texas Higher Education Coordinating Board defines a Texas resident as a United States citizen, or legal permanent resident alien of the United States, who has physically lived in the state of Texas for a minimum of 12 consecutive months and intends to make Texas his permanent residence.

B. Texas Notaries: Individuals wishing to serve as a Notary Public are required to submit

a completed Form 2301, Application for Appointment as a Texas Notary Public, to the Texas

Secretary of State. Form 2301 requires applicants to disclose whether they have been convicted

of a felony or any other crime involving moral turpitude. A conviction of such crime is grounds

for denying the application. Knowingly making a false statement regarding such conviction will

also be grounds for denial, according to the Texas Secretary of State.

Applications for Notary Public in the State of Texas must include the appropriate application fee. As of June 2010 the application fee was $21, according to the Texas Secretary of State. Notaries Public in the state of Texas are required to provide to the Texas Secretary of State proof of a surety bond in the amount of not less than $10,000. All Notaries Public in the state of Texas are required to possess a Notary Public seal of office. The seal may be embossed, stamped or printed. The seal must include the name of the Notary Public, the expiration date of her commission, a five-pointed star and the words "Notary Public, State of Texas."

Any notary public or officer having any financial interest in the transaction is not qualified to take the acknowledgment and any acknowledgment so taken is void. However, employee or officer of a corporation may take an acknowledgment provided that they are not personally interested in the transaction and do not execute the instrument.

The person acknowledging the instrument must appear “in person” before the notary. Tex. Civ. Prac. & Rem . Code §121.004. It is a violation of the statute for a notary to take an


acknowledgment over the telephone. Charlton v. Richard Gill Co., 285 S.W.2d 801, 803 (Tex. Civ. App.– San Antonio 1955, no writ).

2. Identity Theft:

One purpose of notarization is to verify that the signatory who signed the document was really that person, and is not the victim of identity theft. Identity theft is a violation of Texas state law. Identity theft includes obtaining, possessing or using the identity of another individual, regardless of whether they are living or dead and regardless of their age (infant, minor, adult or elderly), with the intent to harm or defraud someone. Under the law, the defendant will be presumed to have had the intent to harm or defraud another person if he or she possesses the identifying information of three or more people, living or dead.

There are defenses to identify theft:

• Lack of intent to deceive or harm another individual • Mistake of fact (e.g. the defendant did not obtain or possess the identity of another

individual) • Age (Minors may receive lighter punishments under the law if convicted.)

The crime of identity theft is a felony. The severity of the felony depends on how many items were obtained, possessed or transferred by the defendant. If the number of items is less than five, the penalty is a state jail felony, which carries a sentence of 180 days to two years in a state prison and/or a fine of no more than $10,000. If the number of items is between five and nine, the penalty is a third degree felony, which carries a sentence of two to ten years in a state prison and/or a fine of up to $10,000. If the number of items is between ten and forty-nine, the penalty is a second degree felony, which carries a sentence of two to twenty years in a state prison and/or a fine of up to $10,000. If the number of items is fifty or more, the penalty is a first degree felony, which carries a sentence of five to ninety-nine years in a state prison and/or a sentence of up to $10,000.

3. Acknowledgments

A. General Rules

An “acknowledgment” is a certificate made by a notary public or by another authorized

by statute to take acknowledgments, stating that the designated party personally appeared before

the notary and acknowledged executing the instrument “for the purposes and consideration

expressed in it” Texas Civil Practice And Remedies Code §121.006(b)(1).

Acknowledgments authenticate an instrument as being the act of the person executing the

instrument. See Punchard v. Masterson, 100 Tex. 479, 101 S.W. 204, 205 (1907); Shelton v.

Swift Motors, Inc., 674S.W.2d 337, 341-42 (Tex. App. – San Antonio 1984, writ ref’d n.r.e.).

An acknowledgment also makes an instrument recordable in the county clerk’s office.

See Martin v. Skelton, 567 S.W.2d 585, 586 (Tex. Civ. App. – Fort Worth 1978, writ ref’d


n.r.e.); see also Tex. Prop. Code Ann. § 12.001(a) (Vernon Supp. 1998) (“An instrument

concerning real or personal property may be recorded if it has been acknowledged, sworn to with

a proper jurat, or proved according to law.”).

The Texas Civil Practice And Remedies Code §§121.001-121.004 set out the persons

before whom acknowledgments or proofs may be made, describe the legal effect of

acknowledgments, and provide sample, traditional and short forms for various types of

acknowledgments. In addition, Texas Government Code §406.013 and §406.014 provide

additional requirements for the taking of acknowledgments and making acknowledgment

certificates by notaries public.

An acknowledgment can be made only by the person who executed the document. A

conveyancing instrument can, of course, be ratified by executors, guardians, directors, or others.

However, unlike a jurat (which states that the instrument was “Subscribed . . . before me, . . .”),

an acknowledgment may be made by the grantor at any time after the document is executed. The

signing party simply appears before the notary public or other authorized officer and

acknowledges that the signature appearing on the document is his/hers and that the instrument

was executed for the purposes and consideration expressed in it. Tex. Civ. Prac. & Rem. Code,

§121.006(b).

Neither the acknowledgment nor the recording of an instrument conveying land titles is

necessary to make it a valid and binding conveyance between the immediate parties thereto.

Chicago Title Insurance Co. v. Alford, 3 S.W.3d 164 (Tex. App.– Eastland 1999, n.w.h.). An

unrecorded instrument is also binding upon the parties’ heirs and on subsequent purchasers who

do not pay valuable consideration and who have notice of the instrument. Denson v. First Bank

& Trust of Cleveland, 728 S.W.2d 876 (Tex. App.– Beaumont 1987, no writ).

Acknowledgments are presumed to be valid. A certificate of acknowledgment is prima

facie evidence that the grantor appeared before the notary and executed the deed in question for

the purposes and consideration therein expressed. Stout v. Oliveira, 153 S.W.2d 590, 596 (Tex.

Civ. App.– El Paso 1941, Writ ref’d. w.o.m.). Clear and unmistakable proof that either the

grantor did not appear before the notary or that the notary practiced some fraud or imposition

upon the grantor in necessary to overcome the presumption of validity of a certificate of

acknowledgment. Id., at 596-97. A suit to recover real property conveyed by an instrument

without a proper acknowledgment or jurat has a four-year statute of limitations. Tex. Civ. Prac.

& Rem. C., §16.033(a).

Section 12.001 of the Texas Property Code provides that instruments concerning real

property may be recorded if they have been acknowledged, sworn to, or proved according to the

statutes, but that instruments conveying real property may not be recorded unless they are

acknowledged by the Grantors. When an acknowledgment is defective to the degree that it

becomes ineffective, no recording is possible and the conveyance is subject to being cut off by


the filing for record of a subsequent deed to a Grantee who has no knowledge of the prior

unrecorded deed. Texas Property Code §13.001; Gulf Production Co. v. Continental Oil Co., 164

S.W.2d 488, 494 (Tex. 1942).

Since the acknowledgment performs an important function, the courts liberally construe

the requirements of an effective acknowledgment. For example, the failure of the notary to show

the date that his or her commission expires, or to show the date of the acknowledgment, or even

to insert into the certificate the name of the Grantor making the acknowledgment does not

invalidate the acknowledgment. Sheldon v. Farinacci, 535 S.W.2d 938 (Tex. Civ. App.– San

Antonio 1976, no writ). Although an acknowledgment is not an essential part of a deed, when it

is used, it is part of the deed. Facts which can be discerned from reviewing the deed as a whole

are considered to be adequately provided.

Even the fact that the Grantor signs only below the acknowledgment is immaterial. Bailey

v. Mullens, 313 S.W.2d 99 (Tex. Civ. App.– San Antonio 1958, writ ref. n.r.e.).

An acknowledgment is not an essential part of a deed or other instrument, and that, as between the parties and persons having actual notice of it, an acknowledgment is not necessary to the validity of the deed or instrument.

The main purpose in acknowledging an instrument is to entitle it to be recorded and thus impart notice of its contents.

B. Seal

A notary’s seal on an acknowledgment from another jurisdiction is not required if the

jurisdiction in which the notary’s certificate is made does not require the attachment of the seal

(Tex.Civ. Prac.& Rem. C., §121.004 and Tex. Prop. C., §12.001). The Texas Secretary of State

annually distributes to all county clerks a list of states which require a notary public’s certificate

to be validated by a seal (Tex. Govt. C., §405.019).

However, the acknowledgment must meet the minimum requirements of the statute. The

absence of a notary’s seal is fatal to the effectiveness of the acknowledgment in Texas. Tex. Civ.

Prac. & Rem. Code, §121.004.

The venue of the certificate of acknowledgment should include both the state and county where the acknowledgment is taken:

"State of __________ "

"County of __________ "

The venue needs to be stated in the certificate in order to show that the acknowledgment was taken within the physical area in which the notary public or officer is empowered to operate.


In Texas, notaries have statewide authority.

• The declarant must appear personally before the person taking the acknowledgment; • He must furnish proof of being the person described in and who executed the instrument

or be personally known by the notary and; • He must not be acting under duress and be known or believed to be of sound mind.

C. The Certificate Of Acknowledgment

The contents of the certificate of acknowledgment are regulated by state law, local practices, the Uniform Recognition of Acknowledgments Act, the Uniform Acknowledgment Act, or the Uniform Law on Notarial Acts (in those states where adopted).

A certificate of acknowledgment usually takes the following form:

• Venue. • Date. • Official character of the person taking the acknowledgment. • The fact that the person whose acknowledgment is taken appeared before the notary

public or officer and acknowledged execution. • The fact that the person whose acknowledgment is taken, is known to the notary public or

officer taking the acknowledgment, or that satisfactory proof of that fact is being furnished.

• Signature of the notary public or officer. • The seal of the notary public or officer. • Date of the expiration of the commission of the notary public or officer, or statement

relative to the fact that the commission is still in effect. • Marital status of the declarant. • Statement as to the authority of the declarant to execute the instrument when the

declarant does not act in the declarant's individual capacity (partner, administrator, trustee, etc.).

Defective Certificate - Corrections

Acknowledgments by unauthorized persons, acknowledgments by officers outside their jurisdictions of authority, acknowledgments by officers interested in the property conveyed, acknowledgments by deputy officers in the name of the principal are all defective. A valid acknowledgment is essential for proper recording; that is, if the acknowledgment is void, the instrument although recorded is treated as an unrecorded instrument.

After a document improperly recorded has been of record more than two (2) years, the defect is cured by the passage of time. A suit to recover real property conveyed by an instrument without a proper acknowledgment or jurat has a four-year statute of limitations. Tex. Civ. Prac. & Rem. C., §16.033(a).


Sec. 16.033 TX. Civ. Prac. & Rem. Code.

Sec. 16.033. TECHNICAL DEFECTS IN INSTRUMENT. (a) A person with a right of

action for the recovery of real property or an interest in real property conveyed by an instrument

with one of the following defects must bring suit not later than two years after the day the

instrument was filed for record with the county clerk of the county where the real property is

located:

(1) lack of the signature of a proper corporate officer, partner, or company officer, manager, or

member

(2) lack of a corporate seal;

(3) failure of the record to show the corporate seal used;

(4) failure of the record to show authority of the board of directors or stockholders of a

corporation, partners of a partnership, or officers, managers, or members of a company;

(5) execution and delivery of the instrument by a corporation, partnership, or other company that

had been dissolved, whose charter had expired, or whose franchise had been canceled,

withdrawn, or forfeited;

(6) acknowledgment of the instrument in an individual, rather than a representative or official,

capacity;

(7) execution of the instrument by a trustee without record of the authority of the trustee or proof

of the facts recited in the instrument;

(8) failure of the record or instrument to show an acknowledgment or jurat that complies with

applicable law; or

(9) wording of the stated consideration that may or might create an implied lien in favor of the

grantor.

(b) This section does not apply to a forged instrument.

(c) For the purposes of this section, an instrument affecting real property containing a ministerial

defect, omission, or informality in the certificate of acknowledgment that has been filed for

record for longer than two years in the office of the county recorder of the county in which the

property is located is considered to have been lawfully recorded and to be notice of the existence

of the instrument on and after the date the instrument is filed.


Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985. Amended by Acts 1993, 73rd Leg., ch.

291, Sec. 1, eff. Sept. 1, 1993. Amended by: Acts 2007, 80th Leg., R.S., Ch. 819, Sec. 1, eff.

June 15, 2007.

In Texas an acknowledgment is defective if it is dated before the date the document is signed. This of course is logical since you can't acknowledge you signed something until you have signed it. This request can be avoided simply by signing the document on the effective date which can be before or after the acknowledgment.

A notary public or officer cannot amend, modify, or correct the certificate of acknowledgment after it has been delivered. A new acknowledgment is necessary to entitle the instrument to be recorded or re-recorded. This can be easily done if the rights of third parties are not prejudiced.

D. Conflicts between the Instrument and the Certificate.

Because an acknowledgment is part of the larger instrument, the instrument will be read

as a whole, and if the facts can be clearly ascertained from the instrument as a whole, a variance

within a particular portion will not be material.

An acknowledgment on an instrument does not indicate when the parties intended to

execute the instrument. The Courts do not look to the acknowledgment on the document in

question to construe the document’s execution date. An acknowledgment does not reflect the

date a party intended to execute an agreement. See Martin, 567 S.W.2d at 586-87 (Tex. Civ.

App.– Fort Worth 1978, writ ref’d n.r.e.).

Where a deed is dated as having been executed on one date and the acknowledgment is

on a different date, in the absence of evidence showing the date on which the deed was actually

delivered, it will be presumed that it was delivered on the date of the deed and not on the date of

acknowledgment. Bell v. Smith, 532 S.W.2d 680 (Tex. Civ. App.– Ft. Worth 1976, no writ).

An instrument which has no date or an impossible date (such as April 31) is presumed to

take effect on the date of its delivery. Webb v. Huff, 61 Tex. 677 (1884).

E. General Underwriting Standards. All recorded documents must be signed in accordance with the applicable execution and attestation requirements of the jurisdiction where the property is located.

Exercise caution if recordable documents are delivered at closing but executed elsewhere. Where possible, require that all recordable documents are executed and acknowledged in your presence. You should require copies of government-issued picture identification from all signers of all recordable documents, whether such documents are executed in your presence or not.


If recordable documents are to be executed out of your presence, where possible, require that such documents are either:

1. executed in the office of an attorney; or

2. executed in a local Title Company.

3. Request photo ID, name, address and phone number of the Notary.

Look at the names and signatures on the recordable documents, particularly when they are prepared and/or executed out of your presence. The following are examples of red flags that should prompt further investigation:

1. The name of the grantor or mortgagor is spelled differently from the name of the record owner.

2. The name of the spouse joining the grantor or mortgagor, who is conveying or mortgaging the property, is different from the name of the spouse who joined him or her in a prior deed or mortgage.

3. The signatures on the current documents are different from the signatures on previously recorded documents or on the government-issued picture identification.

4. The notary's seal is irregular, or the notary is not listed in the state's records.

F. Jurat A jurat is a certificate executed by a qualified public officer before whom an oath is made, which certifies that the affiant swore, or affirmed before the officer to the truth of the statements made, and signed in the officer's presence.

The certificate of jurat serves two distinct purposes: • To witness the signature of the affiant. • To serve as evidence that the affiant was sworn. It does not mean that the statements were true. The document must so state; not just the jurat or the acknowledgement.

Form of a Jurat: Subscribed and sworn to before me this ______ day of _________ , 20__ . __________________________ Signature of Notary Public (Seal) My Commission expires on _______________

Jurats are only required on documents that are sworn to, like Affidavits. Deeds, Deed of Trust and other documents that are not sworn to by the signer do not require a jurat.


G. Attestation

An attestation is the act of witnessing a person's signing of an instrument by a subscribing witness. The witness signs at the end of the attestation, in which the witness certifies that the instrument was executed in the witness's presence.

Texas Government Code Section 406.016 and Texas Civil Practices and Remedies Code Section 121.006 provide for the attestation of various instruments, either by a notary to identify as valid the signature of another public official or corporate officers to the instrument in question. Corporate officers have the power to attest signature of members of that corporation under general law.

Form of attestation in a corporation instrument: ABC, a ______ corporation By _______________________ (President) [Corporate Seal] Attested: _________________ (Secretary) 5. Special Circumstances A. Blind or Illiterate, but able to sign: For a grantor unable to read the document to be executed, substantially the instrument should be read to the grantor by an individual with no conflict of interest with the grantor. The reader should then execute an Affidavit substantially conforming to the following:

“I have no known current or potential conflict of interest with (Name of Grantor) regarding the execution of (description of document). Prior to his execution of such document, I correctly, clearly, and completely read the entire contents of the document to (Name of Grantor), who indicated to me that he understood the contents thereof.” B. Illiterate in English, but Able to Sign. Since an instrument relating to real property may not be recorded in the real property records unless it is in English (Texas Property Code §11.002), it will be necessary to utilize the services of an interpreter to translate an instrument for a grantor who does not speak or read English. The interpreter should execute an Affidavit which includes the following:

“I have no conflict of interest with (Name of Grantor). I am well versed in and competent to read and speak the (Language understood by Grantor) and English languages.”


“At the request of (Name of Grantor), I have made a true and complete interpretation to him of all of the contents of (Description of document) in a language that he understands, using my best skill and judgment. (Name of Grantor) indicated to me that he understood the contents of the instrument translated.”

If the translation is in writing, attach a copy of both the English version and the translated

version of the instrument to the Affidavit.

C. Subscription by Mark. All signatures are individualized markings to one degree or another, and many highly stylized signatures contain no distinguishable letters of the alphabet. In Mexico, in an effort to prevent forgeries, it is common for a signature to certain flourishes or other marks, so often making the signature illegible. The subscription should indicate the use of a mark: HIS MARK (Name of Grantor) An inked thumb print is a good “mark” in that it reduces uncertainty in a forgery claim. When a Grantor is signing by mark, and proof is being made not by acknowledgment but by the co-signing of two witnesses, some attorneys prefer that in addition to the signatures of the witnesses, a statement immediately above their names also be inserted such as:

“(Name of Grantor), being unable to otherwise subscribe hereto, made his mark in my presence, which mark I hereby witness at his request.” _______________________________ _____________________________ (Name of Witness) (Name of Witness)

No special acknowledgment is required for acknowledging the mark of a Grantor, and contrary to popular belief, no witnesses are required. The Texas Civil Practice And Remedies Code §121.011(b) does require the joinder of two witnesses to an instrument executed by the Grantor by making his mark (rather than only one witness where a signature is provided by Grantor), but this provision only applies to the establishment of proof of the instrument for purposes of recording by handwriting of the Grantor where no acknowledgment was taken.

Nevertheless, the use of the following optional acknowledgment makes things clearer

regarding the use of the mark:

STATE OF TEXAS COUNTY OF (COUNTY) This instrument was acknowledged before me on (Date) by (Name of Grantor), the person who signed this instrument by his/her mark. [Seal]


Notary Public in and for The State of Texas Notary’s Name (Printed): My commission expires: D. Physically Unable to Sign. For someone who is mentally alert but whose ability to sign is impeded by a physical impairment, it is appropriate for a notary public and a disinterested witness to assist in the signing. If no Power of Attorney already exists, the party to the transaction may prefer to execute, by this method, a Power of Attorney, and thereby sign only one document instead of the multiple documents usually included in a real estate transaction.

The notary public may sign the name of an individual who is physically unable to sign, if authorized by the disabled person in the presence of a disinterested witness. Texas Govt. Code, § 406.0165. In addition, any responsible adult may act as an “instrumentality” for another if acting in the presence of the other and under his/her direction

( (Name of Grantor)

Signature affixed by [name of notary public] a notary public of this State in the presence of [name of witness] , a disinterested witness, under Section 406.0165, Texas Government Code. [Name of Witness]

If there is a reasonable possibility of later inquiry into the circumstances of the execution of the document, you might have the disinterested witness make an affidavit stating: that the person witnessed the execution of (describe the document); that the Grantor was physically unable to sign but expressed a desire that the document be executed; that the Grantor instructed the notary to sign the Grantor’s name to the document; and the notary did so in the Grantor's presence. E. Minor - Guardian - Uniform Transfers to Minors Act. A “minor” is an individual who is younger than 21 years of age. Texas Property Code, § 141.002. Subscription. ___________________________________________ (Name of Custodian), as Custodian for (Name of Minor), a Minor F. Alteration of the Instrument. An erasure or alteration in a deed, after delivery, whether recorded or not, does not reinvest the title in the grantor or nullify the title in the grantee. Stanley v. Epperson, 45 Tex. 644 (1876). Similarly, an effort to substitute the name of the grantee with the name of a different grantee has no effect of putting the title into the substituted grantee. Nabors v. Nabors, 230 S.W. 1109 (Tex. Civ. App. 1921, writ ref’d.).


Generally, a material change in an instrument without the consent of the parties

will invalidate the instrument. Reagan v. City Nat’l Bank, N.A., 714 S.W.2d 425, 429 (Tex. App.– Eastland 1986, writ ref’d n.r.e.). However, an alteration in the spelling of the Grantee’s name made by the Grantee after the execution and delivery of the instrument by the Grantor will not defeat a title honestly acquired. Starks v. Loftus, 248 S.W. 1090, 1094 (Tex. Civ. App.– Galveston 1923, no writ). Even if the surname of the Grantee (for example changing from a married name to a maiden name) after execution and delivery to the Grantee, does not preclude the Grantee from becoming the property owner through the deed. Jackson v. Brackens, 409 S.W. 482 (Tex. Civ. App.– Houston [1st Dist.] 1966, writ ref’d. n.r.e.). Obviously, the much better practice would be to obtain a Correction Deed or to at least have any minor alteration initialed by the Grantor. In addition, if the minor alterations are made after the execution and acknowledgment of the instrument, it would be prudent to have the instrument re-acknowledged as corrected.

The addition of a substantive clause into an instrument without the Grantor’s consent materially changes the contract of the parties and invalidates the instrument. Kalteyer v. Mitchell, 110 S.W. 462 (Tex. Civ. App. 1908, affirmed 117 S.W. 792). However, the alteration of a deed or other conveyancing instrument after its execution and delivery does not invalidate the instrument as a conveyance. Calame v. Miller, 703 S.W.2d 229, 231 (Tex. App.– Waco 1985, writ ref’d n.r.e.). The deed, after alteration, is effective as originally written. Nabors v. Nabors, 230 S.W. 1109, 1112 (Tex. Civ. App.– El Paso 1921, writ ref’d.). The Grantee is not divested of title by the alteration nor is it revested in the Grantor. Nat’l Bank of Commerce v. May, 583 S.W.2d 685, 689 (Tex. Civ. App.– Eastland 1979, writ ref’d n.r.e.). Therefore, a material alteration of the contents of a deed, after delivery, will not effect the original conveyance but will void the deed and any executory rights or future obligations contained in it. Nabors v. Nabors, 230 S.W. 1109, 1112 (Tex. Civ. App.– El Paso 1921, writ ref’d.).

G Loss or Destruction of the Instrument. Once the conveyance is complete, the document which evidences the conveyance has performed its function, and its continued existence is not necessary to the continuation of title in the grantee. Therefore, the loss or destruction of the deed itself has no legal effect. David v. State Bank of Groom, 238 S.W. 979 (Tex. Civ. App. 1922, no writ). This is so even though the grantee intentionally destroys the document for the purpose of reverting title to the grantor. Riggs v. Farmer, 234 S.W.2d 1021 (Tex. Civ. App.– Ft. Worth 1951, no writ).

H. Redelivery of the Instrument to Grantor. Once the transaction is complete, title is conveyed to the grantee, and the usefulness of the instrument which evidenced the conveyance is expended. The redelivery of the instrument to the grantor for the purpose of reconveying title is wholly ineffective. Higgs v. Farmer, 234 S.W.2d 1021 (Tex. Civ. App.– Ft. Worth 1951, no writ).

I. . Failure to Record the Instrument. Title to transferred property vests in the Grantee upon execution and delivery of a deed. Stephens County Museum, Inc. v. Swenson, 517 S.W.2d 257, 261 (Tex. 1974). A deed does not have necessary to execute another instrument


with a proper acknowledgment certificate. (4) Finally, if the Grantor properly acknowledged the instrument, but the certificate was improperly executed, a District Court is empowered to order the correction of the acknowledgment certificate. Texas Property Code §11.005. An unrecorded instrument relating to real property is binding on the parties and their heirs, as well as a subsequent purchaser who has notice of the instrument. See Waggoner v. Morrow, 932 S.W.2d 627, 631 (Tex. App.– Houston [14th Dist.] 1996, no writ).

J. No Grantee: Generally, it is necessary that a conveyance designate a grantee. A

deed cannot pass title to a grantee that is not in existence. Wilson v. Dearing, Inc., 415 S.W.2d 475 (Tex. Civ. App.– Eastland 1967, no writ). A conveyance that is to a fictitious person is void. Johns v. Wear, 230 S.W. 1008 (Tex. Civ. App.– Texarkana 1921, no writ). However, a fictitious name is not a fictitious person. A fictitious name may simply be used as an alias as a convenience, and upon appropriate proof of identity, the transaction will be upheld. Buist v.

Connell, 233 S.W.2d 458 (Tex. Civ. App.– Eastland 1950, writ ref.).

Texas Property Code §5.021 (requiring that a real property conveyance be made in writing) requires that the writing signed by the Grantor contain the essential elements of a conveyance. As a result, the signing of a blank piece of paper or a printed blank form without the insertion of other matter is meaningless and is not an execution of a conveyance. Southern Pine

Lumber Co. v. Arnold, 139 S.W. 917 (Tex. Civ. App. 1911, no writ).

However, where a Grantor delivers a deed with the name of the Grantee left blank, intending that the title vest in the person to whom the deed is delivered, and the purchaser is expressly authorized at the time of deliver to insert his name or any other name as Grantee, an irrevocable power coupled with an interest is vested in the person to whom the deed is delivered. Glasscock v. Farmers Royalty Holding Co., 152 F.2d 537 (5th Circuit, 1945). Moreover, the power to fill in the blank with the name of the Grantee continues to pass to persons to whom the deed is delivered, and title becomes vested in the person whose name is ultimately inserted, in accordance with the power and authority originally conferred. Fennimore v. Ingham, 181 S.W. 513 (Tex. Civ. App. 1915, mod. on other grounds (Com.) 215 S.W. 956).

When the deed is actually delivered to a purchaser, with the express intent of the Grantor that the name of the purchaser be inserted in the blank, equitable title to the property passes with delivery and is not defeated even by the death of the Grantor before the blank is filled in. Womack v. Stegner, 293 S.W.2d 124 (Tex. Civ. App.– El Paso 1956, writ ref. n.r.e.). Note that this is not a mere Power of Attorney. Authority of an agent would require written authority to convey and would be limited by the express terms of the Power of Attorney. The deed signed in blank must be delivered to the purchaser in order for equitable title to vest.

When a Grantor signs an instrument in blank and verbally authorizes another to exercise discretion to write a conveyance over his or her signature, with power to determine whether the conveyance will be filled in and delivered at all, and to whom the grant will be made, and to what property it is to apply, the instrument is fundamentally incomplete and the authority to fill in the blanks and deliver the instrument is ineffectual. Southern Pine Lumber Co. v. Arnold, 139 S.W. 917 (Tex. Civ. App. 1911, no writ).


Although there are no cases on point, if a Grantor can deliver a deed to a purchaser with the Grantee’s name left blank, a Grantor should also be able to deliver a deed containing a vendor’s lien, with the assignee of the vendor’s lien left blank. However, it would certainly be much better practice for a Grantor to provide a written Power of Attorney to an appropriate agent authorizing the agent to complete the instrument by filling in the name of the purchaser and the name of the assignee of any vendor’s lien retained. A Power of Attorney which authorizes the agent to fill in the Grantee’s name only cannot empower the agent to Insert the name of the assignee of the vendor’s lien. Since sales are rarely for cash, it would certainly be prudent to include both authorities in a Grantor’s Power of Attorney. K. Effect of Fraud. Fraud is different from forgery. In a forgery, an instrument is executed which purports to be the act of another who did not authorize the act. Texas Penal Code §32.21(a)(1). In a fraud situation, the signature is genuine but is procured through deceptive means. In Texas, an instrument procured by fraud is not void. Deaton v. Rush, 252 S.W. 1025, 1031 (Tex. 1923). It is only voidable at the election of the defrauded Grantor. See Slaughter v. Qualls, 162 S.W.2d 671 ( Tex. 1942). Such an instrument is effective as a conveyance of legal title until set aside by the defrauded person through a judicial proceeding. Lighthouse Church of Cloverleaf v. Texas Bank, 889 S.W.2d 595, 602 (Tex. App.– Houston [14th Dist.] 1994, writ denied).

32.46. SECURING EXECUTION OF DOCUMENT BY DECEPTION. (a) A person commits an offense if, with intent to defraud or harm any person, he, by deception: (1) causes another to sign or execute any document affecting property or service or the pecuniary interest of any person; or (2) causes or induces a public servant to file or record any purported judgment or other document purporting to memorialize or evidence an act, an order, a directive, or process of: (A) a purported court that is not expressly created or established under the constitution or the laws of this state or of the United States; (B) a purported judicial entity that is not expressly created or established under the constitution or laws of this state or of the United States; or (C) a purported judicial officer of a purported court or purported judicial entity described by Paragraph (A) or (B).

A deed obtained by fraud can only be set aside by a District Court Judgment canceling

the deed, and such an action can be brought only by the party defrauded. Hughes v. Wright, 127 S.W.2d 215 (Tex. Civ. App.– Ft. Worth 1939, no writ). In such a situation, where the deed is merely voidable and the equitable powers of the court must be evoked to cancel the deed, suit must be brought within a four year statute of limitations. Goodwin v. Dallas, 496 S.W.2d 722 (Tex. Civ. App.– Waco 1975, no writ). However a cause of action to set aside a fraudulent conveyance does not accrue nor its limitations begin to run until the fraud is or could have been discovered by the exercise of reasonable diligence. Lathem v. Richey, 722 S.W.2d 249 (Tex. App.– Dallas 1989, writ denied).

5. Foreign Notaries:


In the U.S., a notary provides legal verification of an individual's signature in business and legal transactions. In foreign countries, a notary does the same, but often has broader powers. Many countries require notaries to be trained in law, some require notaries to be lawyers also, and some have different types of notaries whose authority to certify certain documents depends on their training. For example, a foreign notary might prepare legal documents, do a title search, certify title, translate documents, certify translations, and file and register documents with government authorities. Foreign notarial fees are commonly higher than those in the U.S. because of the extended services provided.

With the exceptions of Louisiana, Puerto Rico, and Quebec, whose private law is based on civil law, a notary public in the rest of the United States and most of Canada has powers that are far more limited than those of civil-law or other common-law notaries, both of whom are qualified lawyers admitted to the bar: such notaries may be referred to as notaries-at-law or notary lawyers. Therefore, at common law, notarial service is distinct from the practice of law, and giving legal advice and preparing legal instruments is forbidden to lay notaries.

Notaries are appointed by a government authority, such as a court or lieutenant governor, or by a regulating body often known as a Society or Faculty of Notaries Public. In foreign countries, a notary-at-law is appointed usually for life, but lay notaries are commissioned for a briefer term with the possibility of renewal. Appointments and their number for a given notarial district are highly regulated. Since the majority of American notaries are lay persons, however, commissions are not regulated, which is why there are far more notaries in the United States than in other countries.

For the purposes of authentication, most countries require commercial or personal documents which originate from or are signed in another country to be notarized before they can be used or officially recorded or before they can have any legal effect. To these documents a notary affixes a notarial certificate which attests to the execution of the document, usually by the person who appears before the notary, known as an appearer or constituent. In places where notaries-at-law are the norm, a notary may also draft legal instruments known as notarial acts which have probative value and executory force as would any lawyer's writing. Originals or duplicate originals are then filed and stored in the notary's archives, or protocol.

Notaries in some countries and states are required to undergo special training in the performance of their duties. Many must also first serve as an apprentice before being commissioned or licensed to practice their profession. In many countries, even licensed lawyers, e.g., barristers or solicitors, must follow a prescribed specialized course of study and be mentored for two years before being allowed to practice as a notary. Notaries public in the United States, of which the vast majority are lay people, may not engage in any activities that could be construed as the practice of law unless they are also a qualified attorney.

In civil or bi-juridical jurisdictions, such as South Africa, the Office of notary public is a legal profession with educational requirements similar to those for lawyers. Many even have institutes of higher learning who offer degrees in notarial law.


6. Foreign Acknowledgment

A. What’s Foreign? A foreign acknowledgment is an acknowledgment taken outside Texas.

This type of acknowledgment is valid as long as it conforms to the laws of the state or county where the acknowledgment is taken, and its acceptance is authorized by the laws of the state where the land lies.

An acknowledgment may be taken outside of Texas but within the United States or its territories, by:

• a clerk of a court of record having a seal; • a commissioner of deeds appointed under the laws of that state; or • a notary public.

If the acknowledgment does not have a notary seal, and the state in which the acknowledgment was taken does not require a seal, then the necessity for a seal is waived. Your county clerk will have a list of states that do not require notary seals.

An acknowledgment may be taken outside the United States or its territories by:

• a minister, commissioner, or charge d'affaires of the United States who is a resident of and is accredited in the country where the acknowledgment or proof is taken;

• a consul-general, consul, vice-consul, commercial agent, vice-commercial agent, deputy consul, or consular agent of the United States who is a resident of the country where the acknowledgment or proof is taken; or

• a notary public.

You may assume that an acknowledgment signed by a U.S. governmental official is appropriately appointed and accredited.

An acknowledgment of a member of the armed forces, a member of the armed forces auxiliary or a member's spouse may be taken by a commissioned officer of the United States Armed Forces or United States Armed Forces Auxiliary.

B. Hague Convention- 1961

In some transactions, a party to the transaction is in another country and needs to get a document notarized. If a U.S. Embassy or U.S. Consulate notary is unavailable, the party may obtain a foreign acknowledgement by using an Apostille Form (below). This form, when executed by a foreign notary from any country that is a member of the Hague Convention, is generally acceptable for title insurance purposes, but only after approval by the underwriter.

Most major countries are signatories to the Hague Convention. If you have doubts, call a Texas Underwriter or check the Hague Convention Website under conventions


C. Apostille

An apostille prescribed by the Hague convention, as cited in 28 United States Code in annotations to rule 44 of the Federal Rules of Civil Procedure shall be in the form of a square with sides at least nine centimeters long and shall contain exactly the following wording:

Apostille (Convention de la haye du 5 October 1961) 1. Country: ___________________________________________

This public document

2. Has been signed by ___________________________________

3. Acting in the capacity of ___________________________

4. Bears the seal/stamp of ______________________________

Certified

5. At ____________________

6. The ____________________

7. By ___________________________________________________

8. No. _________________________________________________

9. Seal/stamp

10. Signature _______________________

Documents must be authenticated for use abroad. This is also called legalization of the document. Authentication means that a seal is placed on the document which will be recognized in the foreign country where the document will be used.

The method or protocol for authentication or legalization of a document depends on whether the country where the document will be used in a party to a treaty on this subject called the "Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents".

For the purposes of the Convention, public documents include: a. documents issued by a state court; b. administrative documents; c. documents executed before a notary public;


Official certificates which are placed on documents signed by persons in their private capacity, such as official certificates recording the registration of a document or the fact that it was in existence on a certain date and official and notarial authentications of signatures.

To find out whether a new country has become a party to the Hague Legalization Convention, go to http://www.hcch.net/ for up to date information about recent accessions to the Convention. The U.S. Department of State Consular Affairs home page is http://travel.state.gov (topic: Judicial Assistance) and U.S. State Department Authentications Office home page, http://www.state.gov/www/authenticate/apostill.html are updated periodically after the Government of the Netherlands notifies the United States that a new country has deposited its instruments of accession to the Convention.

The Convention simplifies the old "chain" authentication procedure which requires multiple seals to be place on documents, by eliminating many links in the chain. Documents which have the special Hague Legalization Certificate are acceptable in other countries where the treaty is in force without any other authentication.

If you have a document you want legalized for use in another country which is also a party to the treaty, a special certification called an "apostille" must be affixed to the document by a competent authority. The apostille is a pre-printed form prescribed by the Convention. A copy of the apostille certificate is set further in 3.c above.

There are three levels of U.S. competent authorities, one for Federal agencies, one for U.S. (federal) courts, and one for state documents, including documents executed before notaries.

Federal Executive and Administrative Agencies: Authentications Office, Department of State, 518 23rd St., N.W., Washington, D.C. 20520, (202) 647-5002 Fee: $5.00. For additional information, call the Federal Information Center: 1-800-688-9889, and choose option 6 after you press 1 for touch tone phones. Walk-in service is available from the Authentications Office from 8 a.m. to 12 noon Monday-Friday, except holidays. Walk-in service is limited to 15 documents per person per day (documents can be multiple pages). Processing time for authentication requests sent by mail is 5 working days or less. See also, the State Department home page: http://www.state. See also in general, 22 C.F.R. 131.

U.S. Courts: Clerks and Deputy Clerks of the Federal Court System. Fee: $5.00.

For the purposes of the Convention, clerks and deputy clerks of the U.S. Courts shall include the clerks and deputy clerks of the following: The Supreme Court of the United States, the Courts of Appeals for the First through the Eleventh Circuits and the District of Columbia Circuit, the United States District Courts, the United States Court of Claims, the United States Court of Customs and Patent Appeals, the United States Court of International Trade, the United States District Court for the District of the Canal Zone, the District Court of Guam, the District Court of the Virgin Islands, and the District Court for the Northern Mariana Islands.


States, Territories and Other Jurisdictions: Each state and other jurisdiction in the United States (District of Columbia, Puerto Rico, American Samoa, U.S. Virgin Islands, Commonwealth of the Northern Mariana Islands, Guam)

Responsibility for the Hague Legalization Convention is shared by various offices in the U.S. Department of State.

• How to Authenticate a Federal Document in the United States - U.S. Department of State, Authentications Office: 1-800-688-9889 (Option #6).

• How to Get a Foreign Document Authenticated for Use in the United States - U.S. Department of State, Overseas Citizens Services, American Citizens Services and Crisis Management - (202) 647-5225.

• How to interpret the Hague Legalization Convention - U.S. Department of State, Overseas Citizens Services, Office of Policy Review and Inter-Agency Liaison, (202) 647-3666.

• Negotiation History - U.S. Department of State, Office of the Legal Adviser, Private International Law: [email protected].

7. Digital Signatures.

A “digital signature” is a unique electronic identifier intended by the person using it to have the same force and effect as the use of a manual signature. This is not a photographic digital facsimile of a hand-made signature. A “digital signature” is a cryptographic message, generated by an algorithmic program maintained by a trusted third party, called a “certification authority.” Two distinct, but mathematically related “keys” are produced.

Both keys are needed to open the document and verify the signer’s identity. The

certification authority issues a “digital certificate,” after verifying that a particular person or company holds a certain mathematical “key.” The digital certificate is then sent with the electronic document to verify that the sender is truly the person or entity identifying itself in the transmission. The recipient uses the widely publicized “public key” to open the document and be assured of who sent it.

A “digital notarization” (a so-called “cyber notary”) can be added to the electronic document by combining the digital “fingerprint” of the original electronic document with the certification authority’s time stamp and its own digital signature, thus providing a verifiable record of the date, time, and parties involved with the document and its digital signature. The processes for operating electronically with digital signatures are still being formed. They are not yet reliable and practical for general use, but they probably will be within the next few years. When they are practical, Texas government should be ready.

Government Code, §2054.060 authorizes the Texas Dept. of Information Resources to develop rules for creating and using digital signatures by governmental entities. Those regulations are available at 1 T.A.C. §§ 203.20 et seq. A valid digital signature must be unique to the person using it, be capable of independent verification, remain under the sole control of the


person using it, and be transmitted in a manner that will make it infeasible to change the data in the communication or the digital signature without invalidating the digital signature.

Local Government Code, §195.002 authorizes the Texas State Library and Archives Commission to adopt rules (after consulting with the Department of Information Resources) to permit the use of digital signatures in the electronic filing of instruments by the County Clerk into the real property records of the county. Those regulations are available at 7 T.A.C. §§ 7.141 et seq.

Local Government Code, §191.009 authorizes County Clerks to file and record digitally-signed, electronic documents. Section 195.003 permits the filing of electronic documents for recording from attorneys, financial institutions, title insurance companies, and state agencies.

8. Series LLC

In May 2009, Governor Perry signed into law Texas Senate Bill 1442, which amends the Texas Business Organizations Code to include new Subchapter M: Series limited liability Company, establishing the "series LLC" as a recognized legal entity under Texas law. While Texas is at the forefront of adopting this complex entity structure, having joined just seven other states in doing so, many questions still remain unresolved regarding Texas Series LLC.

The series LLC is a new breed of entity and has only been on the scene since 1996, when Delaware became the first state to adopt series LLC legislation. Illinois, Iowa, Nevada, Oklahoma, Tennessee, and Utah have subsequently adopted their own series LLC legislation. Although the concept has been blessed by the legislatures of these states, there is some risk involved in using the series LLC. For example, there are many questions regarding the interaction of the series LLC concept with state and federal taxation laws, but a dearth of guidance on these issues, whether case law, statutory law, or administrative regulations. There is also the prospect of potential disregard of the series concept by non-series jurisdictions. In addition to the above, the traditional risk of disregard of corporate formalities continues to persist.

A Series LLC contains individual series in which properties or businesses can be held separately and distinctly from the assets held by other series and by the company at large. In other words, each series may contain a separate rental property (a common arrangement); or, alternatively (by way of example), Series A could contain a rental fourplex; Series B could contain a strip center; Series C could contain a business that buys and sells real estate notes; series D could contain a general contracting business; and so on. The important point is that each series is insulated from the other as well as from assets and liabilities held by the company at large.

If there is a foreclosure on a property contained in Series A, and there is a deficiency at the foreclosure sale (i.e., the property sold for less than the amount owed to the lender), the lender may sue for a deficiency judgment. Assuming that the series company and its transactions were properly structured, the judgment would be enforceable only against Series A assets – not against the assets of Series B, Series C, or against the assets of the company at large. This is not


true of a traditional LLC. All by itself, this is a compelling reason to establish a Series LLC rather than a traditional LLC.

Good recordkeeping is required. Series insulation is preserved only so long as "the records maintained for that particular series account for the assets associated with that series separated from the other assets of the company or any other series." (BOC Sec. 101.601(b)(1)).

Records must be maintained "in a manner so that the assets of the series can be reasonably identified by specific listing, category, type, quantity, or computational or allocational formula or procedure. . . ." (BOC Sec. 101.603(b)). Implicit in the statute is the idea that the assets and liabilities of a series can and should be kept separate both from the assets and liabilities of other series and those of the company at large. Commingling among these categories must be avoided. It is not necessary to establish a bank account for each series in order to comply with Sec. 101.603(b) – although a real estate investor may decide to take this step if the properties held by each series were significantly and substantively different from one another.

Both title companies and lenders are new to transactions and title policies involving specific series, so this is an evolving area. For instance, title companies typically require a certificate of good standing for an LLC, whether it is a traditional LLC or a Series LLC. Since series are created privately, without necessity for public notice or a state filing, no official method exists for establishing that a series (as opposed to the company at large) is in "good standing."

The title company should require that an assumed name certificate be filed indicating that the company is doing business by and through one of its series – e.g., "ABC LLD DBA Series A." This is not a problem and, in fact, is required by Texas Business & Commerce Code Sec. 71.103 – the "Assumed Business and Professional Name Act"– which requires a notarized DBA filing "for a limited liability company, [if the enterprise proposes to operate under] a name other than the name stated in its certificate of formation or a comparable document." The Act requires this filing at both the state and local county levels. Note, however, that the state currently rejects DBA filings for individual series (e.g., "ABC LLC – Series A DBA Ace Investments) on the grounds that (technically speaking) a series is not a stand-alone legal entity. The result is that these types of filings must instead be accomplished at the county level. Fortunately, county clerks do not have a problem with them. Obtaining a DBA for "Ace Investments" is generally required to establish a bank account under the name of Ace Investments and have checks printed in that assumed name.

The liability protection afforded to a series requires and is dependent on the observation of certain formalities in the formation and continued maintenance of the series LLC. As stated above, the series structure will be respected only if (1) the assets of each series are separately recorded and maintained, (2) the company agreement contains language contemplating the series structure and establishing the segregation and distinctness of managers, members, assets, liabilities, and obligations of each series, and (3) the LLC's certificate of formation contains notice of the liability limitations provided by the series structure.


The company agreement of the series LLC establishes the liabilities of the members and managers associated with a particular series. If no such language is used, by default, a member or manager associated with a series is not liable for any debt or obligation of the series—similar to the existing Texas LLC statute as it relates to liabilities of members and managers of a regular LLC.

One pitfall that often occurs when operating within an entity structure is the failure of the owners or managers of such entity to observe corporate formalities and treat the entity as separate and apart from its owners. Such negligence can result in disregard of the corporate or LLC form for legal purposes, thus undoing the liability protection afforded thereby. This can also happen between two entities, such as a parent and subsidiary, particularly when assets are moved from one to the other, or employees are "borrowed."

The record keeping requirements of a series LLC may pose similar opportunities for non-adherence, with the result being that the series status is disregarded, leaving the assets of the different series exposed to the liabilities of the various series. In a series LLC, the separate form of each series must be respected and the corporate formalities and record keeping requirements must be adhered to. The assets of each series must be recorded and accounted for separately from the other assets of the LLC or other series of the LLC. To satisfy this requirement, records of the assets must be maintained in a manner such that they can be reasonably identified by specific listing, category, type, quantity, or computational or allocational formula or procedure, or any other method in which the identity of the assets can be objectively determined. In addition, because each series is treated as its own separate entity, members and managers of the series should be cautiously observe the traditional anti-veil-piercing formalities that must be observed by any limited liability entity in order to preserve its limited liability character. This means the series should have its own letterhead, bank account, and contracts. In addition, actions taken on its behalf should be taken by its own managers or members. Individuals acting on behalf of the series should have the proper authority to do so. A manager of another series or of the LLC that takes action for a series of which he is not a manager or for which he otherwise does not have authority to act, may put that series at risk of losing its separate character.

Although the effects are not specifically addressed in the series LLC legislation, the unraveling of a series LLC due to failure to follow the corporate record keeping requirements could create a complex from a membership interest perspective. It may be entirely unclear how the interests of the owners of each series will translate into membership interests in an LLC that has failed to qualify as a series LLC.

The signature block for the Series LLC should look like this:

XYZ, LLC, a Texas Series Limited Liability Company Series A By: _________________________________ Roland Love, Manager- Series A