# Texas Entity Authority Analysis

## Table of Contents
1. [Overview](#overview)
2. [Limited Liability Companies (LLCs)](#limited-liability-companies-llcs)
3. [Corporations](#corporations)
4. [Limited Partnerships](#limited-partnerships)
5. [General Partnerships](#general-partnerships)
6. [Trusts](#trusts)
7. [Powers of Attorney](#powers-of-attorney)
8. [Foreign Entities](#foreign-entities)
9. [Entity Verification Checklist](#entity-verification-checklist)
10. [Common Issues and Cures](#common-issues-and-cures)

---

## Overview

### Texas Title Examination Standards Chapter VII

**Standard 7.10**: An examiner may rely on an instrument executed on behalf of an entity if the instrument is executed in accordance with the entity's governing documents and applicable law.

**Key Principle**: Verify both:
1. **Entity existence**: Is the entity validly formed and in good standing?
2. **Authority**: Does the signer have authority to bind the entity?

### Statutory Framework

| Entity Type | Governing Law |
|-------------|---------------|
| LLC | Texas Business Organizations Code (BOC) Ch. 101 |
| Corporation | BOC Chapters 2, 21 |
| Limited Partnership | BOC Ch. 153 |
| General Partnership | BOC Ch. 152 |
| Trust | Texas Property Code; Texas Trust Code |
| Foreign Entities | BOC Ch. 9 |

### Secretary of State Resources

- **Entity Search**: https://mycpa.cpa.state.tx.us/coa/
- **Certificate of Fact/Good Standing**: Order from SOS
- **Filing History**: Shows amendments, mergers, name changes

---

## Limited Liability Companies (LLCs)

### Formation and Existence

**Required for Valid LLC**:
1. Certificate of Formation filed with SOS
2. At least one member
3. No involuntary termination

**Verify**:
- [ ] SOS records show active status
- [ ] No forfeiture for tax delinquency (check Comptroller)
- [ ] Certificate of Formation on file

### Management Structure

**Two Types** (BOC § 101.251):

| Type | Who Signs | Authority Source |
|------|-----------|------------------|
| **Member-Managed** | Members | Each member is an agent (BOC § 101.254) |
| **Manager-Managed** | Managers | Only managers are agents (BOC § 101.254) |

**How to Determine**:
1. Check Certificate of Formation (must state if manager-managed)
2. If silent → **member-managed** by default
3. Review Company Agreement for specifics

### Title Examination

**Required Documents**:
- [ ] Certificate of Formation (from SOS)
- [ ] Company Agreement (operating agreement)
- [ ] Certificate of Good Standing or Fact (current)
- [ ] Resolution or consent authorizing transaction (if required by agreement)

**Verify in Company Agreement**:
- Management structure (member vs. manager)
- Signing authority requirements
- Any consent/approval requirements for real property transactions
- Restrictions on transfers

### Execution Requirements

**Proper Signature Block**:
```
[LLC Name], a Texas limited liability company

By: _______________________
Name: [Signer Name]
Title: [Member/Manager/President]
```

**Standard 7.40**: A document executed by any one manager of a manager-managed LLC or any one member of a member-managed LLC is presumed to bind the LLC.

### Common Issues

| Issue | Resolution |
|-------|------------|
| No operating agreement | Default rules apply; member-managed |
| Multiple managers required | Get all signatures or resolution |
| Member/manager removed | Updated agreement or SOS filing |
| Tax forfeiture | Reinstatement + good standing certificate |
| Name variation | Amendment to Certificate or d/b/a filing |

---

## Corporations

### Formation and Existence

**Required for Valid Corporation**:
1. Certificate of Formation filed with SOS
2. Initial directors appointed
3. Bylaws adopted (typically)
4. Stock issued

**Verify**:
- [ ] SOS records show active status
- [ ] No tax forfeiture (check Comptroller)
- [ ] No administrative dissolution

### Authority Structure

**BOC § 21.401**: The board of directors manages the corporation's business.

| Level | Authority | Real Property |
|-------|-----------|---------------|
| Board of Directors | General management | Must authorize significant transactions |
| Officers (President, VP, Secretary) | Day-to-day operations | Sign documents as authorized |
| Shareholders | Major decisions | May need approval for sale of all/substantially all assets |

### Title Examination

**Required Documents**:
- [ ] Certificate of Formation
- [ ] Bylaws (authority provisions)
- [ ] Board Resolution authorizing transaction
- [ ] Certificate of Good Standing
- [ ] Officer's Certificate (verifying authority)

**Verify**:
- Resolution authorizes specific transaction
- Officer signing has authority per bylaws
- No shareholder approval required (check if substantially all assets)

### Execution Requirements

**Proper Signature Block**:
```
[Corporation Name], a Texas corporation

By: _______________________
Name: [Signer Name]
Title: [President/Vice President]

Attest: ____________________
Name: [Secretary Name]
Title: Secretary
```

**Note**: Attestation by Secretary is traditional but not legally required.

### Corporate Seal

**BOC § 3.151**: Corporate seal is not required. Absence of seal does not affect validity.

### Substantially All Assets (BOC § 21.455)

**Shareholder approval required** for sale of all or substantially all corporate assets outside ordinary course.

**Test**: Would sale leave corporation without significant continuing business activity?

**Title Examination**:
- If selling major asset, request officer's certificate confirming either:
  - Not substantially all assets, OR
  - Shareholder approval obtained

---

## Limited Partnerships

### Formation and Existence

**Required** (BOC § 153.051):
1. Certificate of Formation filed with SOS
2. At least one general partner
3. At least one limited partner

### Authority Structure

| Partner Type | Authority | Liability |
|--------------|-----------|-----------|
| **General Partner** | Binds partnership (BOC § 153.152) | Unlimited personal liability |
| **Limited Partner** | No authority to bind (generally) | Limited to investment |

**Key Rule**: Only general partners can execute documents binding the LP.

### Title Examination

**Required Documents**:
- [ ] Certificate of Formation (identifies general partner)
- [ ] Partnership Agreement (LP agreement)
- [ ] Good Standing Certificate
- [ ] If GP is entity: Authority documents for GP

**Verify**:
- General partner identified in Certificate of Formation
- GP has authority (no restrictions in LP agreement)
- If GP is LLC/Corp: Verify GP's authority to act

### Execution Requirements

**Proper Signature Block (Individual GP)**:
```
[LP Name], a Texas limited partnership

By: [General Partner Name], General Partner

_______________________
[Signature]
```

**Proper Signature Block (Entity GP)**:
```
[LP Name], a Texas limited partnership

By: [GP Entity Name], a Texas [LLC/corporation], its General Partner

    By: _______________________
    Name: [Signer Name]
    Title: [Manager/President]
```

### Series LLCs Acting as GP

If the general partner is a series of an LLC, verify:
- Series properly established
- Series has authority to hold property
- Correct series name used

---

## General Partnerships

### Formation

**No filing required** for formation—created by agreement (oral or written).

**BOC § 152.051**: Partnership is association of two or more persons carrying on business for profit as co-owners.

### Authority

**BOC § 152.302**: Each partner is agent of partnership for partnership business.

**Any partner can bind partnership** unless:
- Partner has no authority for that act, AND
- Third party knows of lack of authority

### Title Examination

**Challenge**: No public record of formation or partners.

**Required Documents**:
- [ ] Partnership Agreement (if written)
- [ ] Statement of Partnership Authority (if filed with SOS)
- [ ] Affidavit identifying partners (title company may require)

**Verify**:
- All partners identified
- Signing partner has authority
- No restrictions in partnership agreement

### Statement of Partnership Authority

**BOC § 152.303**: Partnership may file Statement of Authority with SOS specifying:
- Partners authorized to execute real property instruments
- Limitations on authority

**Title Examination**: Check SOS for Statement of Authority.

### Execution by All Partners

**Best Practice**: Get all partners to sign unless:
- Statement of Authority on file, OR
- Partnership agreement clearly grants authority to signing partner

---

## Trusts

### Types of Trusts

| Type | Key Characteristics | Authority |
|------|---------------------|-----------|
| **Revocable Living Trust** | Settlor can amend/revoke | Trustee per trust agreement |
| **Irrevocable Trust** | Cannot be amended | Trustee per trust agreement |
| **Land Trust** | Title-holding trust | Trustee per trust agreement |
| **Testamentary Trust** | Created by will | Court-supervised initially |

### Title Examination

**Required Documents**:
- [ ] Certificate/Affidavit of Trust (Tex. Prop. Code § 114.086)
- [ ] Trustee's Deed or relevant portions of trust agreement
- [ ] Evidence trustee is serving (acceptance, no resignation)

**Certificate of Trust Must Include** (Tex. Prop. Code § 114.086):
- Trust existence and date
- Trust identity (usually name/date, not full agreement)
- Trustee identity and address
- Powers of trustee relevant to transaction
- Revocability/irrevocability
- Authority to act

**Note**: Full trust agreement is typically NOT required.

### Authority Analysis

**Verify**:
1. **Trustee Identity**: Named trustee is current (no death, resignation, removal)
2. **Powers**: Trust grants power to sell/mortgage real property
3. **Restrictions**: Any co-trustee requirements, beneficiary consent, court approval
4. **Active Trust**: Trust not terminated

### Execution Requirements

**Proper Signature Block**:
```
[Trustee Name], Trustee of the [Trust Name]
dated [Trust Date]

_______________________
[Trustee Signature]
```

**Alternative**:
```
[Trust Name] dated [Date]

By: _______________________
    [Trustee Name], Trustee
```

### Land Trusts (Illinois-Type)

Common in Texas for privacy/holding purposes:
- Legal title in trustee
- Beneficial interest in beneficiary
- Trustee acts on direction of beneficiary

**Title Examination**:
- Trustee has full authority to convey
- Beneficiary consent typically not required (unless trust specifies)

### Testamentary Trusts

Created by will; initially court-supervised:
- Letters of Trusteeship required
- May need court approval for sales depending on will/order
- Review order appointing trustee for restrictions

---

## Powers of Attorney

### Texas Statutory Durable Power of Attorney

**Tex. Estates Code Chapter 751** (Durable Power of Attorney Act)

### Requirements for Real Property

**Standard 7.60**: A power of attorney for real property transactions must:
1. Be in writing
2. Be signed by principal
3. Be acknowledged (notarized)
4. **Expressly grant** real property powers

### Statutory Form Powers (Tex. Estates Code § 752.052)

If using statutory form, check boxes for:
- [ ] Real property transactions
- [ ] Claims and litigation (if needed)
- [ ] All other matters (broad authority)

### Title Examination

**Required Documents**:
- [ ] Original or certified copy of Power of Attorney
- [ ] Agent's Certificate (Tex. Estates Code § 751.0021)

**Verify**:
1. **Principal capacity**: POA executed when principal had capacity
2. **Current validity**:
   - Not revoked
   - Principal not deceased
   - Principal not incapacitated (unless "durable")
3. **Durability language**: Contains "This power of attorney is not affected by subsequent disability or incapacity" or similar
4. **Express authority**: Grants real property powers for the transaction type
5. **Property covered**: POA covers specific property (or grants general authority)

### Agent's Certificate

**Tex. Estates Code § 751.0021**: Agent may sign certificate under penalty of perjury stating:
- Principal is alive
- POA has not been revoked
- Agent's authority has not terminated
- POA is valid copy

### Execution Requirements

**Proper Signature Block**:
```
[Principal Name], by [Agent Name],
Agent under Power of Attorney dated [Date]

_______________________
[Agent Signature]
```

### Springing Powers

**Tex. Estates Code § 751.0022**: POA may "spring" into effect upon:
- Principal's incapacity
- Specified event

**Title Examination**: If springing POA, verify triggering event occurred (physician's certificate, etc.)

### Recording Requirements

**Tex. Estates Code § 751.151**: POA must be recorded in county where property located before (or with) the instrument it authorizes.

---

## Foreign Entities

### Registration Requirement

**BOC § 9.001**: Foreign entity must register with SOS before "transacting business" in Texas.

**Transacting Business Includes**: Acquiring real property for use in Texas operations.

**Does NOT Include**: Merely holding title to property (passive investment).

### Title Examination

**For Foreign Entity Conveying Texas Property**:
- [ ] Certificate of Registration (if registered)
- [ ] Good Standing from home state
- [ ] Authority documents from home state
- [ ] Texas registered agent (if applicable)

**Verify**:
- Entity exists and in good standing in formation state
- Authority to act under home state law
- Proper execution per home state requirements

### Name Requirements

If foreign entity registered in Texas under different name:
- Check Registration for Texas name
- Use correct name in documents

---

## Entity Verification Checklist

### For All Entities

- [ ] **Entity Existence**
  - [ ] Certificate of Formation/Organization filed
  - [ ] No dissolution/termination
  - [ ] No tax forfeiture (Comptroller check)
  - [ ] Current Good Standing Certificate

- [ ] **Signer Authority**
  - [ ] Signer identified in governing documents
  - [ ] Position/title verified
  - [ ] No restrictions on authority
  - [ ] Resolution/consent if required

- [ ] **Document Execution**
  - [ ] Correct entity name (exact legal name)
  - [ ] Correct entity type stated
  - [ ] Proper signature block format
  - [ ] Acknowledgment/notarization

### Entity-Specific Checklists

**LLC**:
- [ ] Member-managed vs. manager-managed determined
- [ ] Operating agreement reviewed (or confirmed none)
- [ ] Signer is authorized member/manager
- [ ] No unanimous consent requirement

**Corporation**:
- [ ] Board resolution obtained
- [ ] Officer certificate confirming authority
- [ ] Not substantially all assets (or shareholder approval)
- [ ] Bylaws reviewed for requirements

**Limited Partnership**:
- [ ] General partner identified
- [ ] GP authority confirmed
- [ ] If GP is entity, GP's authority confirmed
- [ ] LP agreement reviewed

**Trust**:
- [ ] Certificate of Trust obtained
- [ ] Trustee currently serving
- [ ] Powers include transaction type
- [ ] No co-trustee or beneficiary consent required

**Power of Attorney**:
- [ ] Durable language included
- [ ] Real property powers expressly granted
- [ ] Agent's certificate obtained
- [ ] POA recorded or will be recorded

---

## Common Issues and Cures

### LLC Issues

| Issue | Cure |
|-------|------|
| Wrong management type assumed | Obtain Certificate of Formation from SOS |
| Operating agreement requires consent | Get member/manager consent resolution |
| Tax forfeiture | Reinstatement + Certificate of Reinstatement |
| Name variation | Certificate of Amendment or d/b/a |
| Dissolved LLC | Reinstatement (if within 3 years) or successor deed |

### Corporation Issues

| Issue | Cure |
|-------|------|
| No board resolution | Obtain ratifying resolution |
| Officer authority unclear | Officer's certificate |
| Substantially all assets | Shareholder consent/ratification |
| Tax forfeiture | Reinstatement + Certificate |
| Wrong entity name | Corrective deed |

### Trust Issues

| Issue | Cure |
|-------|------|
| No Certificate of Trust | Obtain from trustee |
| Trustee changed | Successor trustee documentation |
| Trust terminated | Deed from beneficiaries |
| Co-trustee missing | Get co-trustee signature or successor docs |

### Partnership Issues

| Issue | Cure |
|-------|------|
| Partner unknown | Affidavit identifying partners |
| Dissolved partnership | Deed from former partners |
| Authority questioned | Statement of Authority filing |

### POA Issues

| Issue | Cure |
|-------|------|
| No real property powers | New POA from principal |
| Principal deceased | Probate/estate proceeding |
| POA not recorded | Record before or with deed |
| Revoked POA | Cannot cure—principal must act or new agent |

---

## Reference: Key BOC Sections

| Topic | BOC Section |
|-------|-------------|
| LLC Formation | § 101.001 et seq. |
| LLC Management | §§ 101.251-101.262 |
| Corporation Formation | § 21.001 et seq. |
| Corporate Authority | §§ 21.401-21.418 |
| LP Formation | § 153.001 et seq. |
| LP Authority | § 153.152 |
| GP Formation | § 152.001 et seq. |
| GP Authority | § 152.302 |
| Foreign Registration | § 9.001 et seq. |
| Good Standing | § 3.003 |