Advice for Entity formation (Reside in CA, investing out of state)

[Melody T.]

I'm looking to better understand how folks who live in CA structure their investment entities that are out of state. I'm looking at some investments in OH and will create a LLC there to own the property, but I can't quite figure out how (or IF) I can avoid registering the entity (as a foreign entity) in CA, where I reside. If I'm required to do that (which I think I may be) I'm going to have to pay $800 state franchise tax every year, for each LLC. There has to be a better way. Any input would be appreciated. Thanks

[Katie Balatbat]

@Melody T.

I can appreciate the additional questions, but unfortunately, you're: 1) getting into the realm of legal advice, and 2) are asking specific questions that can be dependent on the facts.  Neither of these are well-suited for a public forum.  So, generally, I guess I would say that where a lawsuit is brought or what law applies would be entirely dependent on the type of case, facts of the situation, and locations of parties involved.  There's an entire semester-long course in law school called Civil Procedure (the absolute worst - *shudders with fright at the memories*) about figuring out the answer to that question based on the facts. You would be well-advised to speak to an attorney who litigates the types of cases that you think are more likely to arise for you to determine what venue and/or law may be applicable.

I tend to favor CA LLCs for CA residents for the benefits that I mentioned, but it honestly depends on the situation.  There's no right or wrong answer, and as you'll see on these forums, everyone has a different opinion, and for different reasons.  The answer of "it depends" is annoying, but sometimes, it's just true.

As to the mortgage, you should look into something called a due-on-transfer clause for additional research as a starting point. 

*This post does not create an attorney-client or CPA-client relationship.  The information contained in this post is not to be relied upon.  Readers are advised to seek professional advice.