## Facts

- Lena Hausman executed a will dividing her residuary estate into four equal shares: to her son George, her daughter Susan, and the children of two predeceased sons (the grandchildren).
- The will authorized George, as executor, to create an LLC and transfer a Brooklyn income-producing rental property to the LLC, then distribute membership interests consistent with the will’s four-way division.
- George and Susan executed LLC articles of organization and an operating agreement; the agreement stated the LLC would exist only upon filing the articles with the New York Department of State.
- Before any filing occurred, Lena executed a deed (Nov. 2, 2001) purporting to convey the property to the LLC.
- The articles of organization were filed later (Nov. 16, 2001), and the deed was recorded after that (Dec. 3, 2001).
- After Lena’s death, the grandchildren challenged the conveyance, arguing no entity existed to take title on the deed date; George argued a de facto LLC existed.

## Issues

1. Whether an LLC that has not filed its articles of organization can exist as a de facto LLC capable of receiving title to real property.
2. Whether execution of formation documents, without a pre-transfer attempt to file, satisfies the “colorable attempt” requirement for de facto entity status.
3. Whether a deed naming a nonexistent LLC as grantee is void.

## Decision

- The Court of Appeals affirmed the Appellate Division and held the deed invalid.
- No de jure LLC existed on the deed date because the articles had not been filed.
- No de facto LLC existed because there was no colorable, good-faith attempt to comply with the statutory filing requirement before the deed.
- Because no entity capable of taking title existed when the deed was executed, the conveyance was void and the property remained in the estate for distribution under the will.

## Legal Principles

- Under New York LLC law, an LLC comes into existence only upon filing the articles of organization with the Department of State.
- De facto entity status requires, at minimum, a colorable, good-faith attempt to comply with the governing formation statute.
- Signing internal formation documents (e.g., articles and an operating agreement) without a pre-transfer attempt to file does not create a de facto LLC capable of holding title.
- A deed naming a nonexistent entity as grantee is void for lack of a legally capable recipient of title.

## Conclusion

The court held that filing is the constitutive act for LLC existence and that the de facto doctrine does not validate a property transfer where no pre-transfer filing effort occurred; the deed to the unformed LLC was void, leaving the property in the residuary estate for distribution according to the will.


In re Estate of Hausman, 13 N.Y.3d 408, 921 N.E.2d 191 (N.Y. 2009)