purchasing a short sale through llc

[Ross Yeager]

Looking at purchasing a short sale through LLC purchase and wanted to see what all the community recommends for validating the LLC (the bank has agreed to sell the short sale to an entity)?

What ways do you use to vet out the LLC to ensure you're not purchasing an LLC with tons of liabilities?

I was going to

• run a credit check
• get state's issuance of good standing
• title/lien checks on the property 
• check the LLC age

Is there was anything else you'd recommend? Should I also run a background check on the owner of the LLC (it's a sole proprietorship). What else should I be looking out for here? 

[Scott Smith]

From a legal standpoint you will want to be careful because you are acquiring the current and historical liabilities of that LLC, also. So not only are you purchasing a property, but you will also be attaching yourself to the liability of the LLC. I would just encourage caution because acquiring an LLC just adds another variable to the equation that can go wrong. You laid out good steps above when considering approaching this. If I were in this situation I would run a check on the LLC owner. I would ask to see the LLC OPAG, see the LLC formation paperwork, any amendments made, ask for a report on any insurance claims they have had, and any documents related to any litigation they have been involved in, any suits filed against them (pursued or dismissed), and overall just any legal communications. I would also suggest that the contract be THOROUGHLY reviewed to see what all liability, responsibilities, etc. are inherited (atty should really review it). I would just say review your options and make sure this one is worth it compared to just buying the property and placing it in your own LLC, or a new LLC.