Business & Asset Protection
Why Your Florida LLC Should Not Be Member-Managed
Most Florida business owners pick their LLC's management structure once, on a form, in about four seconds. Then they never look at it again. That choice decides who can sign the company into a contract, and whether a single member can sign away the company's real estate to a buyer who gets to keep it.
If you're working with a Florida asset protection attorney on anything else first, this is the cheaper conversation.
Florida makes member-management the default
Under Fla. Stat. § 605.0407(1), a Florida LLC is member-managed unless its articles of organization or operating agreement expressly provide that the company is manager-managed, is managed by managers, or that management is vested in managers. The statute also accepts "words of similar import," which sounds forgiving until you're the one arguing to a judge about whether your particular phrasing qualified.
Member-management isn't a decision most people make. It's what they get for not making one.
In a member-managed LLC, every member is an agent
This is the part that surprises people. Section 605.04074(1) provides that in a member-managed company, a member's act binds the company if it's apparently within the ordinary course of the company's business. The only escape is if the member lacked authority and the person on the other side knew or had notice of that. Both halves have to be true.
So your partner's handshake is the company's contract. The lease your brother-in-law signed is the company's lease. You find out later.
Manager-management reverses the default. Under § 605.04074(2), a member is not an agent of the company solely by reason of being a member. Managers are agents, and so is anyone your governing documents or a filed statement of authority empowers. Section 605.0301 is the short version of the whole subject: a person has no power to bind the company except through statutory agency, the articles or operating agreement, a filed statement of authority, or some law outside chapter 605. Four doors, and you control three of them.
"Managing member" is a business card, not a structure
Here's the trap that catches the most Florida operating agreements. Section 605.0407(1)(b) provides that unless the context requires otherwise, the terms "managing member" and "managing members" do not, in and of themselves, constitute words of similar import for purposes of designating manager-management.
Read that again if you have a managing member. The title is everywhere in Florida documents. It does nothing on its own. A company whose operating agreement names a managing member and says nothing else is still member-managed by operation of law, and every member in it is still a statutory agent.
The real estate problem, and why converting doesn't fix it
Section 605.04074(3) is the provision that should keep real estate investors up at night. Unless a certified statement of authority limiting the power has been recorded in the county's real estate records, a member of a member-managed company, or a manager of a manager-managed company, may sign and deliver an instrument transferring or affecting the company's interest in real property. That instrument is conclusive in favor of a person who gives value without knowing the signer lacked authority.
Note both halves. Converting from member-managed to manager-managed moves the signing power to a smaller group. It does not remove it. The only limit the statute itself offers is a certified statement of authority, filed under § 605.0302 with the Department of State, with a certified copy recorded in the county where the property sits. It lapses five years after it takes effect or after its most recent amendment, so it needs a calendar entry, not just a filing.
A Florida hypothetical
Two investors own a duplex in Orange County through an LLC they formed online in 2019. The operating agreement calls one of them the "managing member" and is otherwise silent. They believe that means one person runs the company.
It doesn't. The company is member-managed under § 605.0407(1), neither of them limited anything by recorded statement, and under § 605.04074(3) either one can sign a mortgage against the duplex that a lender giving value without notice gets to enforce. Nobody has to be dishonest for this to go badly. A cash-flow squeeze and one optimistic partner is enough.
While you're in the operating agreement, count your members
Management isn't the only default worth checking. Under § 605.0503, a charging order is a creditor's exclusive remedy against a member's interest in a multi-member Florida LLC, and subsection (6) bars a court from ordering foreclosure at all. Subsection (4) carves out the single-member LLC: there, a creditor who shows that charging-order distributions won't satisfy the judgment within a reasonable time can get a foreclosure sale, and under subsection (5) the buyer takes the member's entire interest and becomes the member. You stop being one.
Florida LLC and asset protection work tends to focus on that single-member gap, which is right. The management clause sits two paragraphs away in the same document and gets skipped.
Privacy, and the public record
Section 605.0212 requires the annual report to carry the name, title or capacity, and address of at least one person with authority to manage the company. One person, whatever the title. A manager that is itself a trust or another entity satisfies that line, which is how a Florida land trust or a manager trust keeps a human manager's name out of the state's searchable database while still naming someone with authority.
That's a privacy result, not a liability shield. It doesn't change who can sign.
Frequently asked questions
Is it hard to convert from member-managed to manager-managed?
No. It's an amendment to the articles or the operating agreement, and amended articles filed with the Department of State. The same is true of moving from single-member to multi-member. The work is in deciding who holds authority and writing it down precisely, not in the filing.
My LLC is manager-managed. Am I done?
Not on real property. Section 605.04074(3) gives a manager the same signing power over company real estate that a member has in a member-managed company. If you want that limited, the recorded statement of authority under § 605.0302 is the tool.
Does a member who can't bind the company still have other rights?
Yes. Management authority, agency, voting, information rights, and fiduciary duties are separate questions under chapter 605, and an operating agreement can treat them differently. Removing someone's agency power does not make them a silent partner by itself.
I formed my LLC in another state. Does this apply?
No. This is Florida law under chapter 605. Default management rules, agency provisions, and charging-order protection vary materially from state to state, and most states are less protective than Florida on foreclosure of a member's interest. Have counsel licensed in that state read your documents.
What to do this week
Open your operating agreement and find the management clause. If you can't point to a sentence that expressly makes the company manager-managed, it isn't, whatever anyone's title says. Then check whether anything is recorded in the county where your property sits.
That's a fifteen-minute review that occasionally saves a building.
If you'd like us to read your actual documents rather than the ones you remember signing, schedule a consult or call 844-842-2774. And download this week's companion guide, The Florida LLC Management Audit, for the fifteen-question version of this review.
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The Florida LLC Management Audit
The fifteen-question version of this review. It walks the management clause, the "managing member" language, the signing authority over company real property, and whether anything is recorded in the county where your property sits.
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Book your Discovery CallThis article is educational and is not legal or tax advice. Joseph E. Seagle is licensed in Florida only, and every statute cited here is Florida law. Reading this creates no attorney-client relationship. Whether your company is member-managed or manager-managed, and what authority any person holds, are questions that turn on your actual articles, operating agreement, and recorded filings.
