Service for Real Property Transfer into a California Limited Liability Company

Asset protection of real property with a Limited Liability Company (“LLC”) is not complete until the LLC owns the real property.  The website DeedAndRecord.com offers online service to transfer ownership.

Limited liability Companies, LLCs, in California are formed for asset protection. This Website sponsored by Mark W. Bidwell a licensed California, transfers real property into the LLC to complete protection of the real estate.

Due on Sale Clause

Prior to transfer the owner should obtain written permission from the lender. Real estate securing a loan has a “due on sale” clause in the promissory note. The promissory note allows the lender to “call” the loan as due and payable in full anytime there is a change in ownership.

The transfer from an owner as an individual to the same owner of a limited liability company is considered a change in ownership in the due on sale clause.  Even if the proportional ownership interest remains exactly the same the transfer is a change in ownership in a loan document.

Most lenders are willing to allow the transfer. But permission in writing should be obtained prior to transfer.  Obtaining permission becomes more important if the loan’s interest rate is low and the current interest rate environment is high.  The lender may take advantage of the opportunity to increase its interest income by calling the note.

Exemptions from Transfer Tax and Property Tax Increase

If ownership interest in the Limited Liability Company and the real property is the same there is no transfer tax and no increase the property tax basis. California has transfer tax and property tax exemptions if proportional interests are kept the same.

But if any change in ownership does occur, such as two people owning real property transferring the real property to an LLC with three equal owners, one third of the fair market value is subject to transfer tax.  The basis for property tax will also be increased to one-third of the fair market value of the real property for property tax.

Quit claim deeds can be used in the transfer of real property to an LLC. Quit claim deeds convey ownership “as is.”  Most often the owner of the real property is the owner of the LLC.  Warranties of title and debt are not needed as provided for in a “warranty deed.”

In California Limited Liabilities Companies are often used to own real property and real estate. LLC’s owned by one individual or a married company are disregard for income tax purposes and no additional tax return is needed. LLC’s allow flow through income and capital gains and as a result avoid double taxation.

Mark W. Bidwell, a licensed California Attorney, forms Limited Liability Company for real property in California.  Mark W. Bidwell markets through websites and the primary site is www.deedandrecord.com.  To transfer title of real property or to form a Limited Liability Company, call Mr. Bidwell at 714-846-2888 or email to Mark@DeedandRecord.com. Office is located at 4952 Warner Avenue, Suite 235, Huntington Beach, CA 92649