Hey Guys,
I'm finally starting my journey into realty investment and decided that one of my first orders of business was to establish a Texas Series LLC. (FYI - The $300 Texas LLC formation fee is waived for veteran until Jan 2020 :). I won't spend too much time going over what a Series LLC is because there are hundreds of threads on the topic, but I wanted to share the language that I included in the 'Supplemental Provisions/Information' section of Texas Form 204 - Certificate of Formation Limited Liability Company.
Section 101.601(a) of the Business Organizations Code (BOC) authorizes the establishment of Series LLC's in the the state of Texas, but there is a provision in the code that some people overlook. This provision requires that a notice of limitations of liability of each series within the LLC be contained in the Certificate of Formation. The statute reads:
Sec. 101.604. NOTICE OF LIMITATION ON LIABILITIES OF SERIES. Notice of the limitation on liabilities of a series required by Section 101.602 that is contained in a certificate of formation filed with the secretary of state satisfies the requirements of Section 101.602(b)(3)...
So after doing some additional research, I complied the following notice and included in my LLC certificate of formation application.
ABC, LLC is a series limited liability company as authorized by Section 101.601(a) of the Texas Business Organizations Code (BOC). ABC, LLC’s operating agreement may establish or provide for the establishment of one or more designated series of members, managers, membership interests, or assets that: (1) has separate rights, powers, or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations; or (2) has a separate business purpose or investment objective.
An established series has the power and capacity, in the series' own name, to:
(1) sue and be sued;
(2) contract;
(3) acquire, sell, and hold title to assets of the series, including real property, personal property, and intangible property;
(4) grant liens and security interests in assets of the series;
(5) be a promoter, organizer, partner, owner, member, associate, or manager of an organization; and
(6) exercise any power or privilege as necessary or appropriate to the conduct, promotion, or attainment of the business, purposes, or activities of the series.
Notice of Limitations on Liabilities of Series. Pursuant to Section 101.604 of the Texas Business Organizations Code (BOC), notice is herby given that the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to a particular series shall be enforceable against the assets of that series only, and shall not be enforceable against the assets of ABC, LLC generally or any other series. None of the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to ABC, LLC generally or any other series shall be enforceable against the assets of a particular series.
This notice satisfies Section 101.602 (b)(3) of the Texas BOC which requires that the certificate of formation of ABC, LLC contains a notice of the limitations provided in Section 101.602 (a) of the Texas BOC.
Disclaimer: I am NOT an attorney nor have I have consulted an attorney to develop this statement so use this at your own risk. I just spent a great deal of reviewing the statute and reading legal docs and articles on the subject and compiled a notice that satisfies the aforementioned provision.
Attorneys/experts - feel free to provide some feedback. Best of luck to everyone!
