In In Re Northlake Development LLC, what is the effect of a deed executed by a minority member on behalf of an LLC without actual or apparent authority when the LLC does not ratify?

• A. The deed is valid and binding
• B. The deed is void ab initio
• C. The deed is voidable at the LLC's option
• D. The deed binds the majority member only

Answer: (A)

The key idea is how authority and ratification work in agency for LLCs in real-property transactions. A deed signed by a member on behalf of an LLC binds the LLC only if the signer had actual authority or the third party reasonably believed there was authority (apparent authority), and the LLC ratified the deal or is estopped to deny it. If there is no actual or apparent authority and the LLC does not ratify, the LLC is not bound by the deed. In that situation, the deed would typically be void as to the LLC, and any liability or risk would fall on the signer personally rather than on the LLC itself. The status of the signer (minority vs majority) does not by itself create binding effect on the LLC without authority or ratification. Ratification after the fact can cure lack of authority, but absent ratification (or apparent authority), the grantee cannot claim the deed binds the LLC.