Can I change the LLC a rental property is listed under?

Question

If I decide I want to change the LLC that a rental property is under....can I do that?  If so, how?  What concerns should I have?

I ask because I might need to buy a property under a LLC and transfer the property after 1 yr to another LLC....

Judy Parker · Answer

Why not just pay the $2,000 rather than going through all that trouble?

Brian Gibbons · Answer

@Ned Carey

The wonderful thing about BiggerPockets is there's many people to pass the buck to!

Chris Martin · Answer

It depends on the state, assuming this is in the US. LLC mergers in my state are only $50, simple to execute (filing wise), and don't even require re-deeding from the merged entity.

Brian Gibbons · Answer

Thanks Ned.

It seems like this is a debt the seller owes, and it should be paid by the seller.

Lease purchase could work, lease til Dec 1 with a sale and purchase to close Dec 1.

Bill Gulley would you please comment? :)  And I am sorry about your Seahawks... (premonition)

Bill Gulley · Answer

Before  I jump into "you could" it would be better to understand what the objective is. I like to look at the goal and build a path backwards to where I am.

I'd be careful about buying an existing company, the older it is the more risk there are that you could end up assuming liabilities. A hold harmless agreement from the seller would/could help.

All the suggestions are possible.

Why wait a year? Is the seller removed as a member after you buy it?

You can form another entity and have the old LLC become a subsidiary of the new one, the new entity could be an LLC, a Trust or another Corp entity. (You don't want a C Corp for a rental).

As a subsidiary you could probably avoid any tax transfer as the old LLC would still be in title, it just comes under the administration of the new one. I understand PA stretches far for their tax money, but I'd think that could be a valid argument that the property or it's interest was not transferred.

You can conclude all business in the old one, change the name, terminate the Operating Agreement and put in a new one and modify the Articles, change bank accounts, you can change everything about the old LLC without transferring the property.

Anyway, not knowing the purpose or what is to be accomplished I can't suggest anything specific. :)

Scott Smith · Answer

You could also just move the property into a trust by a deed . Usually less than $30 fee  paid to the county clerk to file the new deed.

I could wrote a novel about how risky it is to just buy the membership interest. Lease option is MUCH MUCH MUCH safer than buying the company.

Ned Carey · Answer

So I pass the buck to @Brian Gibbons and he passes the buck to @Bill G.  I guess @Chris Martin is the only smart one here.

Ned Carey · Answer

The simple answer is yes. You simply sell it from one LLC to the other.

Keep in mind it might cost you $2000 to transfer the title from one company to the other.  Also keep in mind if you buy the LLC that owns the property now, you are taking on any debts and liabilities that the current LLC has.

The $2000 is the sellers problem, not yours. You are the one jumping though hoops to solve the sellers problem. What are you getting for that?

You might consider an option to buy in Nov. Or some type of lease option that allows you possession of the property not but title does not transfer until November.

@Brian Gibbons do you have input here

Bryan C. · Answer

@Chris Martin yes basically I am paying the seller for their LLC and title remains under the same LLC name.  Then 1 yr from now I can change/merge

Chris Martin · Answer

Ok. Well, you can buy the membership of the LLC. I guess that's what you are doing. That would put you in charge and not change the ownership of record. Is this property in the US? In November 2015, you may be able to do an LLC merger (depending on the location) with the surviving LLC being your "new" LLC.

Can I change the LLC a rental property is listed under?

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