hey guys, i have a seller who wants to sell me a property but suggested i purchase the LLC to avoid closing costs, realty transfer fees etc.
is there any drawbacks to purchasing the LLC?
Hi,
If you were buying a business with sufficient value and future earnings ability taking over a corporate entity is easier. An LLC is a type of corporate entity combining partnership ability with limited liability.
The issues with taking over any LLC is whether the current owner has taken on debt, agreed to contracts which have not yet occurred or has unknown liabilities outstanding.
How much are you really saving if it takes you hours, days or weeks to determine and perform due diligence required to take over the LLC. If you were to ever take an LLC make sure the current owner insures his position of sale to you, nothing like getting down the road and finding out their are problems and the old owner is 100% absolved from liability.
Probable better to pay closing costs and let him keep his LLC.
GR
Buying home with LLC( Limited Liability Company) is beneficial for two major reasons:
- Home owners can maintain some privacy because of LLC is listed as the property owner.
- Owners can protect of their assets in lawsuit event.
Additionally, investors normally use LLC to buy properties they will rent to tenants due to the liability protection offered by the structure.
If you are thinking purchasing a home with an LLC, it is important to consult with attorney and a tax advisor.
thanks guys. i think one of the issues here is that the town requires the property to replace a cesspool before a sale may take place, which is why the seller suggested this. he also said he would sign indemnification paperwork.
The thing with LLCs is that they are not necessarily a legal protection in a lawsuit. If research reveals that the LLC is owned by one person or members of their immediate family, it is pretty easy for a lawyer to peel away the veil and attack personal assets.
Damn I wish my attorney had advised me this before I set mine up being a single member and all.
Agreed with your statement completely, if you are looking to buy a home or invest in real estate, then it is better to take some help from a legal solicitor.
Most people are setting up LLCs for the protection against a lawsuit rather than any tax benefits. Because lawyers are such unethical sharks, they tend to try to tear up LLCs that are owned by one person. Perhaps a better way of protecting assets is to increase the umbrella liability through insurance. Having sufficient coverage in the event of an accident is a great protection.