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Common Unit Purchase Agreement

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COMMON UNIT PURCHASE AGREEMENT

This Common Unit Purchase Agreement (the Agreement) is entered into by and between Seller Name: and Buyer Name: . Effective Date: The parties agree as follows.

1. Parties and Contact Information

2. Description of Common Unit(s)

3. Purchase Price and Payment Terms

Purchase Price: $ . Deposit (to be held in escrow): $ . Balance Due at Closing: $

Wire transfer to escrow account Certified check Other:

4. Closing

Closing Date: . Closing Location:

At Closing, Seller shall deliver to Buyer duly executed conveyance documents evidencing transfer of the described common unit interest, any certificates required by the governing instruments, and any documents necessary to effect the transfer free of liens or encumbrances except those disclosed in writing prior to Effective Date.

5. Representations, Warranties and Conditions

Seller represents and warrants to Buyer, as of the Effective Date and again at Closing, that:

  1. Seller is the lawful owner of the interest and has full authority to sell and convey the interest free and clear of undisclosed liens, pledges, or encumbrances.
  2. No pending litigation or governmental proceeding exists that would impair Seller's ability to perform under this Agreement.
  3. All representations in any disclosure schedule delivered to Buyer are true and correct in all material respects.

Buyer’s obligations are subject to satisfaction of the following conditions precedent: review of title or transfer documentation, delivery of required corporate or third-party approvals, and receipt of any required consents from the governing association. If such conditions are not satisfied or waived in writing by Buyer prior to Closing, Buyer may terminate this Agreement and receive return of the Deposit, except as otherwise expressly provided herein.

6. Adjustments, Taxes and Assessments

Unless otherwise agreed in writing, any assessments, taxes, fees, or dues attributable to the common unit interest shall be prorated as of the Closing Date. Buyer shall be responsible for transfer fees, recording fees, and any documentary transfer taxes unless allocated differently in writing.

7. Default; Remedies

If Buyer defaults in the performance of Buyer’s obligations, Seller may, at Seller’s option, retain the Deposit as liquidated damages or seek specific performance and any other remedies available at law or in equity. If Seller defaults, Buyer may seek return of the Deposit and pursue specific performance or damages. The parties acknowledge that the remedies are cumulative and do not exclude other rights.

8. Notices

All notices required or permitted under this Agreement shall be in writing and delivered to the addresses below (or to such other address as either party designates by written notice):

9. Assignment; Successors

Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party, except that Buyer may assign to an affiliate or to a purchaser of substantially all of Buyer’s assets so long as the assignee executes a written assumption of Buyer’s obligations. This Agreement shall bind and inure to the benefit of the parties and their respective successors and permitted assigns.

10. Governing Law; Dispute Resolution

This Agreement shall be governed by and construed in accordance with the laws of the state indicated below. Any dispute arising under this Agreement shall be resolved by binding arbitration or in the courts located within the specified jurisdiction as elected by the party initiating a proceeding.

Governing Law State:

11. Indemnification

Each party shall indemnify, defend and hold harmless the other party from and against any and all claims, liabilities, costs and expenses (including reasonable attorneys' fees) arising out of a breach of that party’s representations, warranties or covenants contained in this Agreement, except to the extent resulting from the indemnified party’s own acts or omissions.

12. Miscellaneous

This Agreement constitutes the entire understanding of the parties with respect to the subject matter herein and supersedes all prior agreements. Any amendment must be in writing and executed by both parties. If any provision is held invalid, the remainder shall remain in full force and effect.

Signatures

Seller Printed Name:

By:

Date:

Buyer Printed Name:

By:

Date:

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What a Common Unit Purchase Agreement Is and When It’s Used

A Common Unit Purchase Agreement is a legal contract that records the sale and transfer of common ownership units in an LLC, partnership, or similar entity. It sets the purchase price, number of units, payment terms, closing conditions, prorations, representations and warranties, transfer restrictions, and any required consents. The agreement also allocates risk between buyer and seller, identifies required closing deliverables, and specifies governing law and dispute resolution. Properly drafted, it creates a clear record of the transaction and supports downstream corporate filings and ledger updates.

Why a Clear Agreement Matters for Unit Transfers

A well-drafted Common Unit Purchase Agreement reduces ambiguity about price, unit counts, and closing conditions, protecting both buyer and seller. It documents representation clauses, indemnities, and any transfer restrictions or buy-sell provisions, which helps avoid disputes and supports accurate membership ledgers and tax reporting.

Why a Clear Agreement Matters for Unit Transfers

Typical Parties and Stakeholders

The agreement is used by individual investors, corporate acquirers, LLC managers, and legal or finance teams overseeing ownership changes.

  • Individual investors acquiring membership units in an LLC, often reviewing transfer restrictions and capital contribution consequences.
  • Existing members or managers approving transfers under an operating agreement or buy-sell clause to ensure procedural compliance.
  • Corporate buyers or funds conducting due diligence on representations, indemnities, and any required third-party consents.

Different stakeholders focus on different clauses: legal reviews representations, finance confirms purchase price and tax treatment, and operations updates ownership records after closing.

Who Signs and What Their Roles Entail

Purchaser (Investor)

The purchaser executes the agreement to accept obligations: pay the purchase price, provide required tax and identification information, and deliver any closing documents. The purchaser should confirm the accuracy of the legal name, tax classification, and funding source to avoid tax reporting or title transfer issues.

Seller (Entity or Member)

The seller warrants authority to transfer the units, discloses any encumbrances or restrictions, and signs closing deliverables. The seller must coordinate ledger updates and provide executed transfer instruments so the entity can issue amended membership schedules and prepare tax forms.

Essential Data Elements to Include

Buyer Name: Full legal name
Seller Name: Full legal name
Number of Units: Exact unit count
Purchase Price: Dollar amount
Effective Date: MM/DD/YYYY format
Governing Law: State name

Key Legal Risks and Consequences

Breach Liability: Damages and indemnity
Tax Exposure: Incorrect 1099/IRS reporting
Title Defect: Transfer may be voidable
Operating Agreement Conflict: Transaction may be restricted
Missing Approvals: Consent failures invalidate transfer
Authentication Failure: Signature disputes or rejection

Common Preparing Errors to Avoid

  • Using informal party names instead of exact legal entity names causes mismatched tax reporting and can delay closing.
  • Failing to check the entity’s operating agreement for transfer restrictions or required manager/ member consent leads to post-closing disputes.
  • Omitting specific payment mechanics (escrow, wire instructions, holdback amounts) increases settlement risk and reconciliation issues.
  • Not documenting which units remain subject to repurchase, restrictions, or vesting schedules creates ambiguity for future transfers.

How Others Use a Common Unit Purchase Agreement

Two brief examples illustrate typical scenarios and how a clear agreement simplified closing and recordkeeping.

Startup Founder Sale

A founder sold 10% of LLC units to an angel investor and documented price, vesting and repurchase rights at closing

  • The point of clarity was a defined vesting schedule and repurchase option
  • As a result, the investor accepted the transaction quickly, the ledger was updated immediately, and later disputes over repurchase timing were avoided because of the written schedule and closing deliverables.

Secondary Transfer Between Members

Two members executed a private unit sale subject to manager consent and a right of first refusal in the operating agreement

  • The point was obtaining and recording the manager waiver before funding
  • The manager’s written consent attached to the purchase agreement removed ambiguity and enabled the entity to process member equity updates without legal hold.

Filling Out a Common Unit Purchase Agreement — Step by Step

Follow these sequential steps to complete the agreement and prepare for a smooth closing and ledger update.

  • 01
    Identify Parties: Enter exact legal names and business types.
  • 02
    Specify Units: Record precise unit count and class.
  • 03
    Set Price: State total consideration and payment terms.
  • 04
    Closing Conditions: List required approvals, consents, and deliverables.

How the Digital Closing Flow Typically Works

A typical electronic workflow sequences document delivery, signer authentication, execution, and recording to ensure enforceability and traceability.

  • Upload Document: Sender uploads the executed agreement to the platform.
  • Assign Fields: Place signature, initial, and date fields.
  • Authenticate Signers: Use email, SMS code, or stronger methods.
  • Complete and Archive: Capture certificate of completion and store copy.

Core Clauses to Include in a Professional Agreement

A complete agreement addresses pricing, representations, transfer mechanics, closing, remedies, and post-closing duties; these six elements are essential.

Purchase Price

Specify total consideration, allocation per unit if needed, payment schedule, escrow instructions if any, and conditions for adjustments to avoid future disputes over price.

Representations

Include seller and buyer representations about authority, title to units, no conflicting agreements, accuracy of financial statements, and absence of undisclosed liabilities.

Closing Deliverables

List documents required at closing such as executed transfer instruments, resignations if applicable, tax forms, consent letters, and evidence of funds.

Restrictions

Detail transfer restrictions, rights of first refusal, buyback or repurchase rights, lockups, and any applicable tag-or-drag provisions to coordinate future transfers.

Indemnities

Define scope of indemnity obligations for breaches, procedures for claims, caps, survival periods and any deductible or escrowed amounts.

Governing Law

Select governing state law, specify dispute resolution (court or arbitration), and include venue to reduce future procedural uncertainty.

Digital Workflow Settings to Configure

Configure these settings on your eSignature platform to match the agreement’s legal and operational needs.

Field Configuration
Signature Authentication Email plus SMS code or KBA for higher assurance
Signing Order Sequential or parallel as required by closing
Audit Trail Options Enable full IP, timestamp, and event logging
Document Retention Set automatic archival and export formats

Technical and Compliance Considerations for eSigning

Choose platform settings and authentication that meet legal and internal compliance requirements for ownership transfers.

  • Authentication: Email, SMS, or KBA
  • Audit Trail: IP and timestamp logging
  • File Formats: PDF/A, DOCX supported

Key Dates and Timing to Track

Track effective date, funding/settlement date, filing deadlines, and ledger update timelines to maintain accurate ownership and tax records.

Effective Date:

Date when rights and obligations begin

Closing Date:

Date funds and transfer documents are exchanged

Ledger Update:

Entity should update membership ledger immediately after closing

Tax Reporting:

Provide required tax forms to recipients per IRS rules

Record Retention:

Retain signed agreement per compliance guidance

eSignature Pricing and Capability Comparison for Unit Purchase Closings

Compare basic pricing and a few compliance features across common eSignature vendors; signNow appears first per comparative data guidance.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day trial Varies Varies Varies Varies
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently Asked Questions About Execution and Validity

Answers to common execution, authentication, and post-signature questions for Common Unit Purchase Agreements.


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