| Matter of Hausman |
| 2008 NY Slip Op 04698 [51 AD3d 922] |
| May 20, 2008 |
| Appellate Division, Second Department |
| In the Matter of the Estate of Lena Hausman, Deceased. GeorgeHausman, Respondent; Fredda Simon et al., Appellants. |
—[*1] Wolfson & Carroll, New York, N.Y. (John W. Carroll and Michael G. Wolfson of counsel),for respondent.
In a probate proceeding in which the executor petitioned to determine the validity of a deedexecuted by the decedent Lena Hausman, the appeal is from an order of the Surrogate's Court,Kings County (Seddio, S.), dated May 11, 2007, which granted the petition to the extent ofdeeming the deed to be valid.
Ordered that the order is reversed, on the law, with costs, the petition is denied, and the deedis deemed invalid.
On October 16, 2000 the late Lena Hausman (hereinafter the decedent) executed a willdividing her residuary estate between her son George Hausman (hereinafter George), herdaughter Susan Ruth Bersani (hereinafter Susan), and seven of her grandchildren. At the time sheexecuted her will, the decedent was the owner of real property located at 1373 56th Street inBrooklyn. Almost one year later, on October 4, 2001, George Hausman (hereinafter George)executed articles of organization to form 1373 Realty Co. LLC (hereinafter the LLC) for thepurpose of owning, operating, and managing the real property. On the same day, George andSusan also signed an operating agreement, which provided that they were to be the sole membersof the LLC. On November 2, 2001 the decedent executed a deed transferring ownership of thereal property to the LLC. However, the LLC's articles of organization were not filed with theDepartment of State until November 16, 2001, two weeks after the conveyance. Thus, it isundisputed that the property was purportedly transferred to the LLC before the LLC came intolegal existence.[*2]
Following the decedent's death, a dispute arose amongGeorge, Susan, and the seven grandchildren over whether the deed transferring the real propertyto the LLC prior to its legal formation was valid. George, in his capacity as executor of thedecedent's estate, thereafter filed a petition asking the Surrogate's Court to make a legaldetermination as to the validity of the deed and its transfer. Based upon the undisputed facts setforth in the petition, the Surrogate's Court concluded that the deed was valid because the LLCwas a de facto entity on the date the conveyance was made. We disagree.
As a general rule, a purported entity which is not yet in legal existence cannot take title toreal property (see Kiamesha Dev. Corp. v Guild Props., 4 NY2d 378, 389 [1958]; seealso Stone v Jetmar Props., LLC, 733 NW2d 480 [Minn 2007]; Belcher Ctr. LLC vBelcher Ctr., Inc., 883 So 2d 338 [Fla 2004]; Julian v Petersen, 966 P2d 878 [Utah1998], cert denied 982 P2d 88 [Utah 1999]; Roeckl v F.D.I.C., 885 P2d 1067[Alaska 1994]). However, New York has recognized that an unincorporated entity can take titleor acquire rights by contract if it is a de facto corporation (see Kiamesha Dev. Corp. v GuildProps., 4 NY2d 378 [1958]; Matter of Planz [Sees], 282 App Div 552 [1953]; Rockaway Improvement, LLC v DancoTransmission Corp., 9 Misc 3d 210 [2005]; Bankers Trust Co. of W. N.Y. v Zecher,103 Misc 2d 777 [1980]), and we agree with the Surrogate's finding that the de factocorporation doctrine is equally applicable to limited liability companies. However, to establishthat an entity is a de facto corporation or limited liability company, there must be a showing thata colorable attempt was made to comply with the statutes governing incorporation ororganization prior to the purported acceptance of the deed (see Kiamesha Dev. Corp. v GuildProps., 4 NY2d 378, 388 [1958]; see also Stevens v Episcopal Church History Co.,140 App Div 570 [1910]; Stone v Jetmar Props., LLC, 733 NW2d 480 [Minn 2007]).Here, while it is undisputed that George executed the LLC's articles of organization on October4, 2001, there is no evidence that an attempt to file the articles of organization was made prior tothe execution of the deed on November 2, 2001. In the absence of a colorable attempt to complywith the statute governing the organization of limited liability companies by filing, we cannotfind that the LLC was a de facto entity capable of taking title on the date the deed was executed(see Kiamesha Dev. Corp. v Guild Props., 4 NY2d 378, 388 [1958]; see also ClintonInvs. Co., II v Watkins, 146 AD2d 861 [1989]; Stevens v Episcopal Church History Co.,140 App Div 570 [1910]; Conway v Samet, 59 Misc 2d 666 [1969]; Stone vJetmar Props., LLC, 733 NW2d 480 [Minn 2007]). Accordingly, the decedent's purportedconveyance of the real property was void (see Kiamesha Dev. Corp. v Guild Props., 4NY2d 378 [1958]). Mastro, J.P., Santucci, Eng and Belen, JJ., concur.