KRS § 275.250 Says What It Means and Means What It Says

KRS § 275.250 Says What It Means and Means What It Says

      A 2012 decision of the Sixth Circuit Court of Appeals, it reversing the decision of the District Court for the Eastern District of Kentucky, confirmed that KRS § 275.250 both says what it means and means what it says.  Lairsen v. Figuerado, 466 Fed. Appx. 480, 2012 WL 762887 (6^th Cir. Mar. 9, 2002).

      Mike Lairsen brought suit against Jim Figuerado and Mike Neves claiming compensation for having facilitated their acquisition of a limited liability company that in turn owned a marina.  The District Court granted Figuerado and Neves summary judgment, holding that as the LLC held real property, the transaction was subject to both the statute of frauds and Kentucky’s law governing the licensing of real estate agents.  In that the agreement that Lairsen sought to enforce involved real property owned through an LLC, the trial court held that the statute of frauds governing transfers of real property applied.  Further, in that Lairsen was not licensed as a real estate broker, Kentucky law precluded his claim for services.  2010 WL 1740881 (E.D. Ky.).  Both of these determinations were reversed on appeal.

       KRS § 275.250 provides that an interest in a limited liability company is personal property.  Although not cited by the Court of Appeals, it should be noted as well that KRS § 275.240 provides, inter alia, that the LLC’s property is its own and not that of the members.  In that the transaction sued upon involved the conveyance of interest in an LLC, rather than a transfer of the underlying real property, the transaction did not fall within the requirements applicable to the licensing of real estate brokers.  “Thus, the proposed transaction facially involved a sale of personal, not real, property, and a transaction of personal property generally would not require a real-estate broker’s license.”  2012 WL 762887, *3.

      Recognizing the great uncertainty that would apply were the decision of the District Court to stand, the Court of Appeals wrote:

Finally, the district court’s interpretation of Kentucky’s real-estate-brokerage law would lead to problematic results. Since many businesses have some real-property holdings, under the district court’s reasoning many business transactions would require a licensed real-estate broker. For example, such reasoning would require a stock broker attempting to buy or sell shares of a company that owns real property in Kentucky to possess a Kentucky broker’s license. This would create a significant burden on commercial transactions that involve companies with a presence in Kentucky. There is no authority that this is the intent of the Kentucky legislature or Kentucky courts, nor does the text of Kentucky law support such an interpretation.