Legal Question in Business Law in California

Which Is The Preferred Entity?

I plan to sponsor a real estate investment group. I reside in California but I plan to purchase income property in Arizona. Should the holding company be a CA based LLC. or a S-Corp? The holding company will be the manager of the Arizona based LLC. which will then sell membership units to accredited investors. In the event of litigation which entity offers more insulation? Is it true than the members' of an LLC.'s personal assets can be attached to a judgement?


Asked on 7/21/06, 5:53 am

2 Answers from Attorneys
OCEAN BEACH ASSOCIATES OCEAN BEACH ASSOCIATES

Re: Which Is The Preferred Entity?

An LLC insulates personal assets, and, a S corporation limits the number of stock holders. An LLC would have to be amended each time a new partner comes in. Call me directly at 6192223504.

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Answered on 7/23/06, 5:43 pm
Ken Koenen Koenen & Tokunaga, P.C.

Re: Which Is The Preferred Entity?

What you are doing is known as real estate syndication. It can be very complex, and create liability to you as organizer if not done properly. There are also serious tax consequences in regards to how you hold title, and securities issues, depending on what you are getting people to invest in.

You can make a lot of money in syndication, but there are substantial risks if not done properly.

You should not do anything until you have met with a good attorney knowledgable about real estate investments, trusts, securities and tax. It will be well worth the investment.

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Answered on 7/21/06, 11:40 am


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