Real Estate:
Business Entity Formation
Selecting the appropriate business entity to hold title to real property is an important decision for owners, investors and developers of real estate. The appropriate legal entity may be a corporation, general partnership or joint venture, limited partnership, limited liability company or other association. At the same time, a client may be best served by holding the real estate individually in the client's own name or as a tenant in common with other persons. In addition to choosing the appropriate business entity, we also advise our clients on the property state of organization, be it California or a more "friendly" jurisdiction such as Delaware or Nevada.
The choice of the business entity to be formed for a particular real property opportunity considers our client's objectives (e.g., long term investor or developer), function (e.g., active manager or passive investor) and tax status (for planning purposes). In many cases, a client's desire to maintain control and decision making authority will conflict with the desires to limit liability risks and avoid or minimize state and federal income taxes payable by the entity. Our role is to advise our client's of the benefits, costs and risks of owning and operating a particular real estate opportunity through ownership of the possible business organization that may be available for such purposes. Once the choice and jurisdiction for the business entity has been made, our attorneys and paralegals will file the appropriate forms with the governmental agencies and prepare or review the necessary governing documents for the entity.
Through proper planning, an owner of real estate should be able to save expenses and reduce or defer income taxes during the ownership and at disposition of the property. The appropriate business entity may also be used to effectively pass the real estate to subsequent generations or sell one's interest to other investors and co-owners through mechanisms such as buy-sell rights, rights of first refusal and the like..
At McDonough Holland & Allen PC, we also advise our clients on operational issues and assist when disputes may arise among co-owners or investors. Our attorneys are intimately familiar with the nature of the real estate industry. In many of our relationships, our lawyers serve as general counsel to the business entity, providing ongoing advice and maintenance programs to see that the appropriate state and local filings are made and the minute book is maintained. We also work with our clients on reorganization and dissolution strategies, either because of a dispute or in anticipation of selling the real estate owned by the entity.
Our clients consist of individuals, public and private companies, government agencies, and financial institutions. Our clients undertake the roles of investors, lenders, insurers, developers and builders. If you would like to discuss the appropriate business entity to form to use for the purpose of holding a real estate opportunity, or if you would like assistance in the preparation or review of the governing documents for the entity selected, please contact David Krotine.
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