Court Reaffirms that LLC Members Are Separate From the LLC and DO NOT Have An Ownership Interest In The LLC’s Property. Therefore Member Can File Lien.
Just a brief post regarding LLC Property:
On September 3, 2013, the Illinois Appellate Court for the Fifth District filed an opinion in the case of Peabody-Waterside Development, LLC v. Islands of Waterside, LLC, Regions Bank N.A., and Prairie Construction Management, LLC 2013 IL App (5th) 120490.
The Court’s Opinion is consistent with Illinois law related to limited liability companies (LLC). The fact that the trial court got it wrong and had to be reversed, however, is not entirely surprising. Experience demonstrates that many lawyers, and courts, either don’t understand the law related to the separateness of an LLC from its members, or refuse to believe it.
The law in Illinois is quite clear. Members of an LLC have no ownership interest in the property or business of the LLC. Members own an economic interest in the distributable cash flow (if any) from the LLC, but no interest in the property or business that generates that cash flow. The LLC Act is clear. The case-law is clear. Like it or not, this is the law in Illinois (and in virtually all USA jurisdictions).
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