Effective January 2016, California lenders will be able to work more easily with limited liability companies (LLCs). These new changes, referred to as Assembly Bill 506, come in response to the existing Revised Uniform Limited Partnership Act. The amendments simplify the lending process as well as the specifics of mergers in order to make each step run much more smoothly while simultaneously protecting the lenders.
While the amendments appear to greatly benefit lenders, likewise LLCs will benefit as well. For brand new businesses, this could certainly change the game for loan approval and for existing businesses it can impact how certain business is conducted. It is important that new and veteran LLCs alike take a look at the new amendments in order to better understand how certain aspects of their business will be influenced.
What are the Changes?
There are a number of small tweaks to the existing law that ranges from certificates of cancellation to LLC conversion. While people should certainly read the amendments in their entirety, some of the most prominent changes are:
- Association is made easier–individuals may form an LLC by simply by signing appropriate paperwork and submitting it to the Secretary of State.
- Disassociation is made easier-individuals may express disassociation at any time or disassociation can be assumed under certain circumstances such as death.
- Authorizes legal representation of a legal member–any individual working on behalf of a legal member can now act on behalf of the member and exercise the same influence as the member.
- Eliminates due diligence of lenders–lenders no longer have to have consent for a merger from all members of the LLC.
Assembly Bill 506 includes a number alterations that should be examined thoroughly in order to get a better understanding of the changes and how they can impact business overall.
What Do the Changes Mean?
LLCs and lenders have always been expected to go through lengthy, complicated loan processes. The amendments to the existing California real estate law actually benefit lenders by simplifying the process and protecting the interest of the lenders. However, all is not lost for the LLC in the process. LLCs will be able to gain funds more easily because the amendments cut down on some of the red tape that usually gets in the way. For brand new businesses, this could actually fast track the process while lenders feel more protection. It could work as a win-win for all involved.
Call a Knowledgeable Real Estate Attorney
Laws change and with those changes can come uncertainty. The good news is that you do not have to go through the process alone! Are you an LLC looking for advice for the lending process? Do not hesitate to reach out to a knowledgeable attorney who is familiarity with California real estate law. Kristina Reed is well-versed in California real estate law and understands the implications that amendments can have on new and seasoned businesses. Located in Sacramento, CA, Kristina is ready to help you with all of your real estate needs.