Selling share of property under an LLC to another investor

[Carlos Rodriguez]

I have a mortgaged, single family property in Austin, TX under an LLC that is owned and managed 50/50 by myself an another partner. My partner wants to exit the property/LLC and I have a new partner lined up to take their share. All parties have settled on the price. Now I need help executing the transaction.

Should I set up a new LLC with the new partner, deed the property to the new LLC, and dissolve the current LLC?

Should I remove the current partner in the current LLC and add the new partner to the current LLC?

Is there a special sales contract that is used for this kind of transaction?

Are there any other courses of action I'm not thinking of?

Aside from mortgage and tax filing implications, what other considerations should I be thinking of?

Thanks in advance for the guidance!

[Stuart Udis]

Looking at this solely from the transactions costs, it will be less costly to sell the membership interest. Otherwise you are opening the door to pay transfer taxes and likely originate a new loan. If the partner who is exiting the deal is a guarantor on the loan, this is something that will have to be sorted out with the lender. However this is a fact pattern that really warrants your accountants counseling. There’s tax consequences for the partner who is exiting as well as basis issues the accountant should weigh in on.