What Is a Corporate Resolution?
A corporation or an LLC is a legal entity, but it cannot physically hold a pen. It must act through its human officers and managers. However, an individual officer cannot simply decide to sell the company's headquarters on a whim.
To protect the shareholders, major transactions require a corporate resolution. This is a formal, written document detailing a vote taken by the Board of Directors (or LLC members). The resolution explicitly grants a specific individual (like the CEO or a Managing Member) the legal authority to execute a specific transaction on behalf of the company.
Why It Is Required for Real Estate Closings
In Florida commercial real estate, corporate resolutions are absolutely mandatory.
If an LLC is buying a $5 million apartment complex, the title company and the bank will not allow the president of the LLC to sign the mortgage until they see the corporate resolution. The bank needs absolute, ironclad proof that the president isn't acting as a rogue agent. If the bank loans the money without seeing the resolution, the LLC's other owners could later sue the bank, claiming the president had no authority to put the company $5 million in debt.
Requirements for a Valid Resolution
To be accepted by a title underwriter or a commercial lender, a corporate resolution must typically include:
- The exact date and location of the board meeting where the vote took place.
- The specific address of the real estate being bought, sold, or mortgaged.
- The exact printed name and title of the person authorized to sign the deed or loan documents.
- The signature of the Corporate Secretary (or equivalent), certifying that the resolution is a true and accurate reflection of the board's vote.
Related Terms
- Corporation — The legal entity that issues the resolution
- Certificate of Good Standing — Often required alongside the resolution at closing
- Title Company — The entity that demands the resolution before issuing insurance
Barnes Walker Corporate Services
Barnes Walker's commercial real estate attorneys draft precise corporate resolutions and operating agreements for Florida investment groups, ensuring the designated signers have the exact, undisputed legal authority required to clear commercial title underwriting. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC