File with the Secretary of State as "Transacting Business"

[Justin R.]

I recently purchased an apartment in GA with a LLC. My LLC is a California LLC. I was told by my closing attorney (GA) I need to file with the Georgia Secretary of State as a foreign LLC in order to do business in GA. Another attorney said it is not needed for real estate purposes (buy and hold rentals) as that is not consider "transacting business."

According the the GA SOS website Code Title 14 there are provisions to what "business" is. SOS Code 14-2-1502 subsection B,9 states.

(b) The following activities, among others, do not constitute transacting business within the meaning of subsection of this Code section:

(9) Owning, without more, real or personal property;

Does anyone have experience and a suggestion how to proceed? Thank you!!

[Eamonn McElroy]

I'm not an attorney, and you should get the final word from one.

Let's dissect the language:

"Owning, without more, real or personal property" [Emphasis Mine]

Most laypeople skip over really important language when reading sections of legal code, as they tend to focus in on parts of the code, and in doing so they miss others and don't consider everything together in a holistic manner.

What does the "without more" above mean?  I'm interpreting it to mean anything above and beyond merely holding a non-productive real estate or personal property asset means that you're running a business and would not qualify for exemption here.

Operating rental real estate would certainly be more than merely owning the real estate asset.

I would register the LLC as a foreign company with the GA Secretary of State. It's not expensive. We're business friendly.

Don't forget about your GA nonresident tax obligations.