Is an Independent Manager right for you?

With real estate markets heating up, there has been a growing number of requests for Independent Manager services.  This post outlines what this service is, and the next post in the series outlines how a typical Independent Manager engagement works.

An Independent Manager is one type of “Independent Representation” engagement that we offer – the others being Independent Director (in the case of a Corporate entity type), Springing Member (which is a dormant member/manager/director who is called into action if certain conditions are met), and Special Member (a broad term for an independent member whose role is defined in the operating agreement).  The Independent Manager refers specifically to a manager for an LLC.

What is an Independent Manager?

An Independent Manager is a manager of an LLC who is independent of the owner/operators of the LLC, and has no financial relationship with the LLC.  The operating agreement typically outlines the roles and responsibilities of the independent manager, which is usually very narrow in scope.  The independent manager is NOT an active manager of the entity, but generally sits in the background until needed.

Why would an entity require an Independent Manager?

The Independent Manager is generally a lender driven request – a bank or financier would require an Independent Manager to sit on the board and operate in the interest of the lender.  This interest is outlined in the operating agreement, but generally it is to prevent the LLC from going insolvent or declaring bankruptcy.  This is an added protection for the lender to make sure their investment is secure.

Are there other uses for an Independent Manager?

From time to time we receive requests for Independent Managers to be the sole manager of the entity – generally to keep the true owner hidden.  There are many risks associated with this type of engagement, and we will NOT contract for these purposes.

If you have any questions about the Independent Manager, feel free to email us at info@incserv.com!

Josh Twilley, President