Need professional help with entity creation (Utah)

[Mahonri Bussey]

I am in the process of getting investors and locking down some turnkey properties in Alabama while living in Utah county, Utah. I need help on creating the entity in the correct state in order to get the best benefits for a partnership and being able to provide a system to payout to the investors each month and have the option to buy them out when I refi the properties in 5 years. I understand that every state is different when it comes to entity creation so I want to create the entity in the state that will offer me inexpensive renewal rates and will protect my business from outsiders. thank you ahead of time.

[Denise Evans]

"Choice of law" rules are very complicated. In most law schools, this is an entire two- or three-semester hour course. If a decision affects the entity itself, then the court must follow the law of the state where the entity is organized. That is why so many corporations incorporate in Delaware, because it is a corporation friendly state. If the decision is about a contract to be performed in Alabama (such as a lease) or land located in Alabama, or a tortious or negligent act that occurred in Alabama, then Alabama law will be used.

If your entity is organized is some other state, you must register as a foreign corporation in Alabama. Otherwise, you will not be allowed to use the Alabama courts to protect your rights or obtain remedies such as eviction.  That is because your entity will be a "stranger" to Alabama. Registering to do business in Alabama is a simple form and a filing fee. You go to the website of the Alabama Secretary of State, at http://www.sos.alabama.gov/

If I lived in Utah and were obtaining Utah investors, I would form my entity in Utah.  That way, your lawyer and you and your investors will be familiar with the law regarding the entity itself, instead of having to learn about Alabama entity law AND Alabama real estate law.