- within Technology topic(s)
- with readers working within the Environment & Waste Management industries
In an important decision out of Florida's Third District Court of Appeal, KADA 13, LLC v. Georgetown Holdings, Inc., No. 3D25-0303 (Fla. 3d DCA Feb. 11, 2026), the Court affirmed a trial court ruling that one co-trustee/manager of an LLC could unilaterally transfer the company's sole real property asset without the other co-trustee's consent. This was based on the express language in the operating agreement and related trust documents.
The case arose from a contentious divorce. KADA 13, LLC was a single-asset company holding a parcel of property in Miami. In January 2022, the parties executed an operating agreement naming both spouses as co-trustees with independent authority to "sell, lease, exchange, mortgage, pledge, or otherwise transfer or dispose of all or substantially all of the property or assets of the Company" without the other's consent.
When the marriage deteriorated in May 2022, the husband unilaterally transferred the Miami property to a creditor to satisfy a $500,000 short-term promissory note that both spouses had personally guaranteed. The wife then attempted to amend public filings to remove the husband as manager, but the trial court found the transfer was already authorized under the operating agreement.
This decision makes clear the importance of getting the operating agreement right.
- Under Florida's LLC Act, the operating agreement governs members' and managers' rights and duties. Here, broad language allowing each trustee/manager to act "individually and without the need of the signature or consent of the other" meant one manager could sell the LLC's only asset without the other's approval. This poses incredible risks for both owners in the event of a business or personal falling out.
- If the operating agreement is flawed, a unilateral filing with the Florida Division of Corporations will not fix it. While one manager in KADA tried to remove the other's authority by amending the LLC's annual report, the trial court held that public filings cannot override rights granted by an operating agreement.
- The courts may not bail a party out from the unforeseen consequences of a problematic operating agreement.
This decision is a cautionary tale. Care and foresight should be paramount when drafting operating agreements. A broad grant of unilateral authority to dispose of company assets can be weaponized if a relationship breaks down between owners. Managers and members of LLCs need to think carefully about whether co-managers should be required to act jointly on major transactions like asset sales and encumbrances. The provisions and grants of authority in operating agreements should be reviewed periodically and amended as necessary to ensure that they still serve the current needs of the members and managers and do not expose the parties to unnecessary legal and business risks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]