I’m new to the legal side of REI and could really use some help.
I’m buying my primary house which is supposed to close next week. I’ll be living in this house, but I don’t want the house in my name, I want it in an LLC. How do I go about doing this?
I was told that I could setup the LLC asap online, and then put the LLC as the buyer on the contract. I’m sure it’s more involved than this, what else do I need to know? Will my bank have a problem with a LLC being the buyer on the contract?
Also, this will be a double closing, i.e., my investor friend will buy the house from the bank on the 23rd and sell to me on the 25th, same price. Would it be better to have the investor buy via a LLC directly from the bank and have the LLC sold to me? Is there any benefit to taking that route, is it even possible?
If this is related to your other post, then there is no transfer tax savings.
If you are using the LLC for asset protection, then it should be set up properly before you buy property. That doesn’t happen with an online or DIY LLC. I have yet to see one of these set ups do anything but implode when challenged.
So you recommend I should have an attorney handle this?
My closing has no attorneys involved(all legal aspects have been handled already). So if I get an attorney involved to do this, what can I expect to pay him?
Would you have surgery done without a doctor? Setting up an LLC and other type of planning is financial surgery. It’s just as complicated and just as many things can go wrong. You won’t someone competent doing the work.
It will cost many thousands to get a competent attorney to drop everything and get this done inside of a week. You can get a bozo who will provide a cookie cutter LLC in less than a week, but that’s the same as burning the money. You will get some pretty documents that won’t do anything if you ever need to rely on them.
If keeping your name out of the public record is the only reason and you don’t care about doing it right, you can get an online LLC now and then hire someone later to fix all the mistakes. I prefer trusts to hold property. There is less cost and maintenance and more flexibility.
Expect to pay between $1,500 and $2,000 for your LLC. I would strongly suggest you set it up before the closing so your name does not appear on the chain of title. If their isn’t sufficient time I typically have my client’s establish a land trust to take title at closing then create the LLC to hold the trust interest. Either way the propety will be protected by the LLC.
Can you explain this? I can see the charging order protection for member liability, but I must be missing how an LLC protects property it owns from liability associated with that property.
A LLC provides two forms of protection: One – protection for the LLC members from liabilities associated with LLC assets i.e., should harm befall a tenant the recovery will typically be limited to the assets of the LLC (insurance being one of the assets) and not the LLC member’s assets; Two – the LLC assets are generally protected from the LLC member’s individual liabilities e.g., personal creditor claims, and in some cases taxes ( Several years ago I read an interesting IRS memorandum released by the Office of Chief counsel under # 199930013, discussing how the Service cannot levy on LLC’s assets for the debts of a member.) I did not intend to imply in my original post that property held by an LLC is protected from its own liabilities. In fact this is why every investor must carry insurance. However, if insurance will not cover the claim or the claim exceeds policy limits then the LLC assets will be at risk and not those of the members.