QUESTION: There are three of us involved in the original filing of our LLC in the state of WA this January. One of original the members wants out. To date there has not been any capital investment in the company by any of the members. We intend to commence business on March 1, 2006. Also the Initial Annual Report has not been sent yet. What needs to done in order to remove her name and interest to be split up between the other two remaining members?

The Washington Limited Liability Company Act is codified under the Revised Code of Washington at RCW 25.15. The manner by which a limited liability company is formed is set forth at RCW 25.15.070. From your question it appears that each of the three members of the new company executed the certificate of formation. Further it appears that the certificate was property filed, either by hand delivery, mail or on-line, with the Washington Secretary of State. Unless a delayed effective date was specified, then the company was formed when the certificate was filed with the Secretary of State.

The act of withdrawing from membership in a Washington limited liability company is referred to as an event of disassociation. RCW 25.15.130(3) provides in relevant part that a member may withdraw from a limited liability company at any time and in accordance with the limited liability company agreement.

What is unclear from your question is whether or not the members also entered into a limited liability company agreement. It is common for members of a new LLC to form the company with the Secretary of State prior to finalizing the terms of and entering into a formal limited liability company agreement. If a limited liability company agreement has been signed, then the specific terms with respect to a member withdrawing from the company must be followed. At minimum this requires the members drafting and signing a disassociation agreement that complies with the specific terms of the limited liability company agreement. The disassociation agreement should also provide for the manner in which the withdrawing member’s interest in the company is allocated among the surviving members.

If a limited liability company agreement has not been signed then the withdrawing member need only give notice, preferably in writing, to the surviving members to accomplish the act of disassociation. In this case, absent an agreement to the contrary, the surviving members will own the company on a 50-50 basis.

You should receive your first annual report along with your Certificate of Formation from the Secretary of State. When you fill out the form only list the names and addresses of the surviving members of the company.

Lastly, depending on the anticipated role of the withdrawing member in the planned business of the company, it may make sense to notify prospective business partners and members of the business community that the company plans to do business with that the withdrawing member has exited the company.

QUESTION: I have purchased a timeshare several months ago and now I would like to add a friend’s name in the title. My friend is a married man, so does his wife have to be involve? Is there some document she need to sign?

In Washington, “timesharing” is governed by the Washington Timeshare Act codified at RCW 64.36. Timesharing refers to any number of arrangements that grant persons access to one or more properties, often vacation resorts, on a pre-determined basis. RCW 64.36(11) defines a “Timeshare” as a right to occupy a unit or any of several units during three or more separate time periods over a period of at least three years, including renewal options, whether or not coupled with an estate in land. RCW 64.36(16) defines “unit” to include the real or personal property, or portion thereof, in which the timeshare exists and which is designated for separate use.

Unit owners often share their timeshare interests or sell a block of their timeshare rights, however, selling fractional units of ownership can present property management operational difficulties and impact the quality of a project for the other owners’ and their guests. Therefore, many project developers draft restrictions in the homeowner association (“HOA”) or property owner association (“POA”) declaration. If the HOA/POA agreement you signed contains a restriction against fractional conveniences, those restrictions will control your ability to add your friends name to the title. Therefore, a complete review of your HOA/POA documents is a good place to start your investigation to determine if there are any restrictions in conveying a fractional interest. Additionally, because many timeshares are sold on a “right to use,” license or lease basis, you also need to determine whether or not you actually have a fee interest in real property to convey.

If there are no restrictions against the conveyance and you have a fee based interest, then you may undertake the conveyance by executing a “statutory warrant deed,” a “bargain and sale deed” or “quit claim” deed. The instrument that best suits the transaction depends on the warranties of title (or lack thereof) that you are able to convey. The deed must be signed by the “grantor” (the party bound by the deed) and acknowledged in a manner proscribed by law. If the deed contains restrictions, and a timeshare deed most certainly will, then the deed will also be signed by the “grantee,” or party to whom you are conveying an interest in title. Your HOA/POA management company, along with legal counsel, will be able to assist you with proper, authorized documentation for your transaction.

As to your friend’s wife’s interest in the conveyance, Washington is a community property state. Generally, all property acquired after marriage by either the husband or wife is presumptively community property. According to RCW 26.16.030(4), neither spouse may purchase or contract to purchase community real property without the other spouse joining in the transaction of purchase or in the execution of the contract to purchase.