What happens if I don't annually renew my LLC with the state?

[John Castillo]

I bought a property almost a year ago in the name of an LLC. Now that a year has gone by, the state is asking me to renew the LLC. Do I need to renew it? What happens if I don't? I assume if it expires, someone can't create an LLC in the same name and just claim ownership of my property, right?

[Greg Scott]

Your LLC goes dormant. This effectively means you have no asset protection, although if you haven't been maintaining corporate formalities, you didn't have that anyway. You also will not be able to refinance with a dormant LLC.

Theoretically, nobody can claim ownership of your LLC and sell the property, but there is a lot of fraud out there, so it has likely happened before. Because of this, you may also have some challenges if you let your LLC stay dormant for a long period of time and then try to re-activate it when you want to sell.

In short, not-renewing your LLC would be a bad decision. Either properly maintain your LLC or move the property into your name.