Administrative Termination of an LLC
Hypothetical: Barn Doors Are Us Real Estate Holding, LLC organized in 2000. The LLC annually renewed its registration in 2001 – 2018. However, in 2019 it did not renew its registration and it was administratively terminated by the Minnesota Secretary of State in 2019. In 2020, the LLC purchased the lot next door and a deed was conveyed to the LLC.
Because Barn Doors Are Us Real Estate Holding, LLC was administratively terminated, it is a nonexistent entity. Any deeds conveying property to an unregistered LLC are void, and therefore this deed was void. However, if the LLC had reinstated its existence prior to the deed being conveyed, then the deed conveying the property would not be void. This is because an LLC can retroactively reinstate its existence. It is prudent to avoid the administrative termination of an LLC because it could open up the members to a claim to pierce the LLC veil and hold the member’s personally liable for any judgment against the LLC.
Now is the time to make certain that you have annually renewed your legal entity and assumed name with the Minnesota Secretary of State’s office. Most legal entities and assumed names must submit an annual renewal with the Minnesota Secretary of State. If your legal entity does not annual renew its registration with the Minnesota Secretary of State, the Minnesota Secretary of State will administratively terminate your legal entity status.
Spangler and de Stefano, PLLP represents LLC and other business entity types and its owners.
The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.