What to Do Before Your LLC Signs a Contract (The Step Most Owners Skip)

You found the perfect office space. The landlord sends over the commercial lease. You read through it, negotiate a few terms, and sign on the signature line. Or maybe it’s a vendor agreement. Or a software contract. Or equipment financing.

You signed it as the LLC’s manager or authorized member. You used the LLC’s name. You filed it away. Done.

Except for one thing: at no point did the LLC formally authorize the agreement. There is no resolution. No written consent. No governance record documenting that the company — as an entity — approved this commitment.

The Governance Gap Most Owners Don’t See

The person signing the contract may be authorized by the operating agreement to sign on behalf of the LLC. That is not the same thing as the LLC authorizing this specific contract.

The operating agreement grants general authority. A contract resolution documents the exercise of that authority for a specific agreement. Courts, counterparties, and lenders don’t just want to know who can sign. They want to know whether the LLC decided to enter this agreement.

A contract resolution is not about whether you had the right to sign. It is about whether the LLC made the decision.

Why Unsigned Authorizations Create Veil-Piercing Risk

When courts evaluate whether to pierce the corporate veil, they look for evidence that the LLC operates as a separate entity. Formal authorization of major decisions is one of the clearest signals of that separation.

When an owner signs a contract without any LLC authorization on file, it looks like the owner made a personal decision and attached the LLC’s name to it. A creditor’s attorney will point to each unauthorized contract as evidence the LLC did not maintain its own governance process.

A pattern of contracts signed without resolutions creates cumulative veil-piercing exposure. Each unauthorized contract is another data point. One missing resolution might be overlooked. A history of them paints a picture.

Banks, Landlords, and Counterparties Want Proof

• Commercial leases — landlords increasingly require a resolution showing the LLC authorized the lease
• Equipment financing — lenders want a resolution proving the LLC approved the borrowing
• Vendor agreements with indemnification — counterparties may require proof the LLC is bound
• SBA loans and lines of credit — the underwriting checklist routinely includes “LLC resolution authorizing the borrowing”
• Business acquisitions — governance records for major contracts are part of due diligence

The LLC with resolutions on file moves forward. The LLC without them scrambles or loses the deal.

Real Estate Investors: Every Property Needs Its Own Paper Trail

Real estate investors who hold properties in separate LLCs face the most concentrated version of this problem. Every property acquisition, lease, management contract, and vendor relationship should have a corresponding resolution.

A single investor with five rental properties in five LLCs might have 15 to 20 contracts across those entities. If none have corresponding resolutions, the governance trail for every entity is empty.

What a Contract Authorization Resolution Should Include

• The legal name of the LLC and its state of formation
• A description of the contract and its general terms
• The counterparty name
• The effective date of the contract
• Authority language referencing the operating agreement
• The name and title of the designated signer
• A separate-existence clause
• The signature and title of the authorizing member or manager

What to Do If You’ve Already Signed Contracts Without Resolutions

Create retroactive resolutions with ratification language. Ratification is a formal clause in which the members or managers retroactively approve and ratify a contract already executed. It should identify the contract, the counterparty, the date it was signed, and include the same authority and separate-existence language as a forward-looking resolution.

Ratification does not pretend the authorization existed at the time of signing. It formally memorializes the LLC’s approval after the fact. This is not as strong as authorizing before signing, but it is far better than nothing.

The best time to create a contract resolution is before the contract is signed. The second best time is now.

How Minutes.llc Handles Contract Resolutions

Minutes.llc generates contract authorization resolutions through a guided workflow. You answer a few structured questions and the platform assembles the document from versioned legal language blocks.

Every contract resolution includes authority statements, separate-existence clauses, and ratification language where applicable. SHA-256 hash verification proves the document has not been altered. Documents are stored with an immutable audit trail.

No legal knowledge required. No blank text fields. No attorney drafting fees. Your first document is free.

Create your first contract resolution →

Minutes.llc is a document automation platform. It is not a law firm, does not provide legal advice, and no attorney-client relationship is created by using this service. Consult a licensed attorney for legal questions specific to your situation.