Upshot: The TN Attorney General weighs in on whether an LLC can buy or sell property in Tennessee without using a real estate licensee.
The Tennessee Attorney General (AG) recently released an opinion re: limited liability companies (LLCs) and how they are interpreted under the Broker’s Act, in response to a question from the then-acting Commissioner of Commerce and Insurance. This follows a previous AG opinion from 2014 which answered that LLCs do not fall under the exemption for “corporations” under the Broker’s Act because for purposes of the act, an LLC is not a corporation.
The new opinion issued Sept. 16, 2019, answers whether an LLC can meet the definition of “owner” as found in an exemption to the Broker’s Act. The opinion states that the “owner exemption” in Tenn. Code Ann. § 62-13-104(a)(1)(A) does apply to LLCs but does not apply to any of the LLC’s agents, officers, or employees.
Because of the plain meaning of the term “owner” and “person,” the AG is essentially saying an LLC itself (i.e. the actual entity) would qualify as an owner of the real estate and as a person under the legal meaning of that term. However, an LLC cannot act for itself. Rather, it relies on its agents, officers, or employees to act in the LLC’s best interest. Since those individuals are not the actual owners of the real estate—because the LLC is the actual owner—then the individuals do not qualify for the exemption under the “owner exemption” in Tenn. Code Ann. § 62-13-104(a)(1)(A).
The AG clarifies this in Opinion No. 5 by stating that a person who owns all or part of an LLC does not have any estate or interest in the property owned by the LLC, because the property is the property of the LLC itself and not its individual members.