New business owners routinely form limited liability companies, “LLCs,” when starting their business. And with good reason – LLCs limit their owners’ liability, are not double-taxed, and are easier to form than corporations. But just starting an LLC doesn’t guarantee you’ll reap those benefits. This post describes common pitfalls that can immobilize an LLC or even expose a business owner to personal liability for the LLC’s debts.

 

Pitfall #1: Skipping the Operating Agreement

Every North Carolina LLC files “Articles of Organization” listing the LLC’s name, address, and registered agent. But many LLCs skip the critical step of preparing an operating agreement.

An operating agreement is an LLC’s constitution. It allows the LLC’s owners to decide how ownership is split, how responsibilities are shared, how profits are disbursed, and how to add – or kick out— company members. Without one, an LLC is stuck with the default rules of North Carolina law, which could be markedly different from the owners’ intentions. When disputes arise between co-owners, an LLC can become deadlocked and unable to operate. Drafting an operating agreement before disputes arise is critical to ensuring an LLC avoids deadlock and operates as the owners intended.

 

Pitfall #2: Omitting the Company Name in Contracts

Some LLCs are a one-person shop: the owner is the sole employee and deals directly with clients and creditors. In those cases, LLC owners should pay special attention that their contracts list the LLC – not its owner – as the contracting party. An LLC only shields its owners from personal liability if the LLC is the one doing business. Owners should be vigilant that company documents such as contracts, invoices, and letterhead list the LLC, and only the LLC, as the contracting party. Otherwise, you may have just exposed yourself to personal liability.

 

Pitfall #3: Missing Annual Reports

Once a year, LLCs must file reports with the North Carolina Secretary of State containing the LLC’s current contact information and list of officials, plus a filing fee of $200. Failure to file an annual report eventually results in the “administrative dissolution” of your LLC. An administratively dissolved LLC cannot do business until it is reinstated. That means it cannot enter contracts – leaving you seriously exposed if an issue arises while your LLC is dissolved. To avoid this issue before it arises, make sure that your LLC promptly files its annual reports each year.

 

Pitfall #4: Ignoring Corporate Formalities

One of the worst mistakes a business owner can make is to treat an LLC as a financial extension of themselves. The law considers an LLC to have a separate existence from its owners. Failure to respect that separation opens the door for creditors and legal adversaries to “pierce the corporate veil” in a lawsuit and access your personal assets.

To ensure your LLC keeps a separate existence, you should keep your LLC adequately capitalized. That means the LLC should be more than a shell – it should have enough assets on hand to cover ordinary expenses. Business owners should also follow corporate formalities and refrain from using the LLC’s accounts as a piggy bank to cover personal expenses. These steps keep the LLC, and its liability, separate from you individually.

An LLC properly maintained is a powerful tool for business owners. By avoiding these pitfalls, you can ensure you’re getting your money’s worth from your LLC.

 

Blanco Tackabery regularly assists businesses, including LLCs, in a wide variety of corporate and litigation issues. If you are a business owner, we are ready to help you understand everything you can do to maximize your business’s legal protection.

---

Ryan Dovel works with the Intellectual Property Practice Group at Blanco Tackabery. Harnessing his experience as a law clerk at the North Carolina Business Court, Ryan represents individuals and businesses in civil litigation. In addition, he practices in other areas such as municipal law, and fiduciary litigation.

When navigating the world of municipal land-use decisions, one of the most important things to understand is who’s doing the deciding. Often, the elected members of the city or town Council will be the ultimate decision-makers – perhaps after receiving the guidance of paid staff or a volunteer board. Sometimes, staff or appointed volunteers are the deciders themselves. If you’re pursuing a rezoning or development permit in North Carolina, you must know who’s who.

Council

The city or town Council carries the heaviest weight with respect to land-use decisions. In some jurisdictions, this body of elected officials may use a different name such as Commissioners or Aldermen. The Council creates local zoning and development laws called “ordinances” and decides any rezonings (i.e., changes to the zoning “map”). The zoning map indicates the types of activities for which land can be used in a particular area. Council may also be the decider for various other land-use issues, such as approving subdivisions. But depending on the jurisdiction, many tasks are delegated to staff or volunteer boards.

Staff

Staff, such as a Planning Director, make many “administrative” decisions. These employees will decide cut-and-dried matters that don’t require policy determinations or interpretating subjective standards in the law. For instance, an ordinance may allow churches in a certain zoning district while imposing specific conditions ranging from the maximum height of the steeple to the number of parking spaces needed. Before issuing a permit for the church, staff will decide whether the conditions have been met. While staff’s powers may be limited, their influence may nonetheless be significant. Staff will often provide “recommendations” to Council or other boards with more decision-making power.

Planning Board

Council will appoint citizens to a Planning Board. The level of authority that the Board wields varies by jurisdiction. However, Planning Boards will often hold public hearings and vet proposals for ordinance changes, rezonings and major subdivision approvals before the proposals reach Council for final action. Again, even when a Planning Board is not the final decision-maker, the Board’s recommendation may carry significant weight. Notably, North Carolina law requires proposed changes to the zoning ordinance or the zoning map to be reviewed by a Planning Board. The Board must make findings about whether zoning changes are “consistent with” any comprehensive land-use plan adopted by the city.

Board of Adjustment

Like a Planning Board, the Board of Adjustment is a group of appointed citizens whose duties are often not well-understood by the public. However, Boards of Adjustment usually have very different duties from Planning Boards. The Board of Adjustment is typically a final decision-maker for certain issues that involve “quasi-judicial” proceedings. The Board conducts court-like hearings and weighs evidence to determine whether subjective standards have been met. It will decide issues like whether to grant a “variance” (a special exception to a land-use rule) or a “special use permit” (a permit to undertake an activity in a zoning district that is sometimes but not always allowed, depending on the circumstances).

Historic Preservation Commission

In cities with historic districts, a Historic Preservation Commission may also perform a variety of duties related to historic properties. The Commission will typically consist of appointees with specialized knowledge about historic districts – such as architects or historians. While many of the Commission’s duties may be merely advisory, the Commission can be the final decision-maker on whether to grant a “certificate of appropriateness” required to alter a historic property.

Appearance Commission

Some cities also appoint an Appearance Commission, which is typically comprised of citizens with special expertise in design, landscaping, horticulture or related fields. While the power of this Commission is usually very limited, the Commission may play important roles on issues such as vetting the aesthetic suitability of public buildings or revising ordinances to enhance the appearance of the city.

When advocating for (or against) a municipal land-use proposal, always investigate the decision-making process. This process should be outlined in the city’s development ordinance. City staff may be useful in explaining the process to a lay person; however, hiring an attorney with experience in representing parties before municipal boards can be a worthwhile investment to obtain your desired outcome.

---

Elliot Fus has served as town attorney for several North Carolina municipalities and has represented private parties in land use matters. He is a member of the N.C. Association of Municipal Attorneys and leads the firm’s Litigation Practice Group.

 

 

 

 

 

 

 

Many businesses have a regular law firm that handles most of their legal needs – including occasional litigation. But when you need to litigate outside your home state, you might need to find “local counsel” to help. Selecting an appropriate candidate will be an important step in your litigation strategy.

 

Local Counsel – What Is it?

Attorneys are licensed in individual states. Some attorneys are licensed in multiple states, but generally not more than a few. So let’s say you’re a business based in New York. A business dispute with a North Carolina company has arisen and either (A) they sue you in North Carolina, or (B) you need to sue them in North Carolina. Your business usually works with an attorney in New York who is familiar with your company and its legal issues but is not licensed in North Carolina and has little or no experience with North Carolina law or the North Carolina court system. You’d like your regular attorney to handle your case. You know and trust that attorney, and the attorney understands your business. But your regular attorney can’t just get a North Carolina law license overnight to represent you in the case. Moreover, even if the license wasn’t a problem, your attorney doesn’t know the idiosyncrasies of an unfamiliar court system and the judges and other personnel who run it. What are you to do?

The answer is “local counsel.” Typically, an out-of-state attorney can get permission to represent you in a “one-off” case in another jurisdiction – if the attorney works along a “local counsel” who is admitted in the court. Finding the right lawyer in a far-away jurisdiction, however, is not always an easy task. These 5 tips will help you find the best person for the job.

 

1. Experience Counts

While this cliché applies in virtually every context, it’s especially true for selecting local counsel. Your regular attorney is already a smart person who knows how to litigate. What you need from local counsel is someone who has deep knowledge of the players and the customs of the local court – and, ideally, a level of respect in the community that clothes your “unknown” out-of-state lawyer with credibility and integrity. This isn’t to say that every good local counsel has gray hair. A young attorney who recently served as a law clerk to the assigned judge might possess more relevant experience than a random attorney who has practiced for decades. But there’s little value in hiring a local lawyer who doesn’t understand the subtleties of the local system any better than an out-of-state visitor.

 

2. Find a “Best Supporting Actor”

Another key consideration is whether a candidate is good at playing a supporting role. Some of the most popular and respected lawyers are generally great at what they do, but don’t play “second fiddle” well. Good local counsel should push back on lead counsel’s strategies, if appropriate. But if your local counsel always wants to dominate the legal team, it may lead to dysfunction. A great Robin can be worth more than an extra Batman.

 

3. Don’t Underestimate the Value of a “Rule Geek”

“Local rules” particular to a certain jurisdiction are often an overlooked part of the law. For instance, while federal courts across the country are subject to the Federal Rules of Civil Procedure, a particular federal judicial district – or even a particular judge – might have special procedural rules or preferences. Different counties in state courts may have similar peculiarities. These local rules can be tedious – ranging from the page limitations on briefs to the procedures for how to file a document “under seal.” Some practitioners forget these rules even exist. But the court may care about them a lot. If a lawyer is a stunning orator but doesn’t know the local rules, he or she is probably not a good fit to serve as local counsel.

 

4. Clarify Your Budgetary Expectations

In my experience, most arrangements with local counsel go smoothly from a financial perspective. But if you have particular expectations about cost, discuss those expectations with your local counsel from the start. Be aware that the cost of local counsel cannot be reduced to zero. Typically, courts will require local counsel to review documents that you file with the court – even if they were drafted by a perfectly competent out-of-state lawyer. Sometimes, local counsel will also be required to attend hearings – even if another lawyer does all the talking. If a local counsel simply wants to get paid a nominal sum to let you “put their name” on documents, you don’t want them. They likely don’t understand their responsibilities and won’t add value to your team.

 

5. Got References?

Before selecting a local counsel, consider asking others for a referral. Do you know a company or lawyer in your area who has previously worked with a lawyer in the applicable jurisdiction? Were they pleased with their choice?

An experienced local counsel can not only fulfill requirements necessary to allow your regular lawyer to represent you in another state, but can significantly enhance the quality of your legal team. Choose wisely.

---

Elliot has over 28 years of experience litigating in state and federal courts in North Carolina. He has served as local counsel in North Carolina and has assisted his clients in selecting local counsel for cases in other jurisdictions.

North Carolina’s Expedited Procedure for Dealing with Unauthorized Occupants

If you are a property owner with unauthorized non-tenant occupants living on your property, you now have a direct, expedited way to remove those unauthorized persons and recover possession of your property. New legislation addresses the problem of how to evict when no landlord-tenant relationship exists and “summary ejectment” proceedings don’t apply.

The General Assembly of North Carolina recently ratified House Bill 96. This bill, titled “An Act to Create an Alternative Remedy for the Expedited Removal of Unauthorized Persons from Private Property by a Law Enforcement Agency and to Modify the Law Related to Pet Shops,” provides landlords and property owners an expedited process for the removal of unauthorized persons from residential property. This new process is governed by N.C. Gen. Stat. § 14-159.52 and became effective December 1, 2025.

Under this new law, “unauthorized person” means “a person or persons occupying residential property who has no legal claim to the property, is not entitled to occupy it under a valid rental agreement or contract for deed, has not paid any rent or other form of payment to the property owner or an authorized representative of the property owner in connection with the occupancy of the property, and is not otherwise authorized to occupy the property.” Basically, this new law is specifically for persons who are not a tenant, do not have a signed lease, or have never paid rent.

 

What’s the Procedure?

The first step is to send a notice to the unauthorized occupant demanding possession of the property. After the demand letter is sent and the time for them to vacate expires, you can file a complaint and summons in the county where the property is located. The summons and complaint are provided to the sheriff, who must serve the unauthorized persons within 24 hours. After the unauthorized persons were served, the sheriff then files a return. Next, a hearing is held before a magistrate as soon as possible, but no more than 48 hours after the unauthorized person was served. If the court rules in favor of the property owner, the court immediately enters an order granting possession to the property owner and stating the time the unauthorized person must vacate, which cannot be more than 4 hours after the order is served on the unauthorized person. Of course, all parties have a right to appeal the magistrate’s order for a new trial. However, if the unauthorized occupant appeals an unfavorable decision against them, the court will set an appeal bond that the unauthorized occupant must first pay to appeal. The appeal bond will be at least $10,000 and could potentially be more based on estimated market rent during the appeal and other reasonable damages.

 

The Complaint

The complaint form can be found at AOC-CVM-407. Before filing a complaint, at least the following should be true:

1. The requesting party is the property owner or the authorized representative of the property owner

2. The property that is being unlawfully occupied is residential property or property used in connection with or appurtenant to residential property

3. An unauthorized person has entered the property after the property owner acquired the property and is remaining or residing unlawfully on the residential property of the property owner

4. The property was not offered or intended as an accommodation for the general public at the time the unauthorized person entered

5. The property owner or the authorized representative of the property owner has directed the unauthorized person to leave the residential property

6. The unauthorized person is not a tenant of the owner of the property

7. The unauthorized person is not an owner of the property

8. There is no pending litigation between the property owner and the unauthorized person related to the residential property

9. There is no other valid rental agreement or contract for deed that has been entered into or formed

10. No rent or other form of payment has ever been demanded of or paid by the unauthorized person to the property owner or to an authorized representative of the property owner

 

What happens if, after judgment, the unauthorized person does not leave or remove their belongings within the allotted time?

If the unauthorized person fails to vacate, then it would constitute a criminal trespass under N.C. Gen. Stat. § 14-159.13(a)(1). If the unauthorized person fails to remove personal property, the property owner or authorized representative may remove the unauthorized person’s personal property from the property and move it to or near property line.

 

Blanco Tackabery handles a plethora of landlord tenant cases throughout this great state of North Carolina, and we handle a wide variety of issues and situations. If you are a property owner, property manager, or landlord dealing with an unauthorized occupant living on your property, we are ready to help you understand this process and get back what is yours.

 

---

Daphne Myers works with the Property Management Practice Group, Civil Litigation Practice Group and Affordable Housing and Community Development Practice Group at Blanco Tackabery. Daphne represents individuals and businesses in civil litigation.