Legal Question in Real Estate Law in California

A transfer can be accomplished by a grant deed or quit claim deed. The transfer will, however, most likely result in a property tax reassessment under Prop. 13. If you are doing this yourself, you may want to consider discussing the matter with an attorney or other tax professional.

Scott Schomer

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Schomer Law Group is a law firm focusing in the areas of probate, wills, trusts and estate planning and serving greater Los Angeles including communities of Culver City, Santa Monica and West Los Angeles.

Same as any other real-estate transfer is done, by deed. The fact that one of the parties is an LLC, corporation, or whatever, changes nothing.

Remember that transfer of valuable land from the individual to the LLC is just one side of the transaction. Will the individual get fair value from the LLC in return, such as cash or an equity stake in the LLC, such as a membership? Or is the transfer a complete or partial gift?

The persons setting up and carrying out the transaction need to be aware that sham transactions or unexplained gifts may have consequences. A lawyer and/or an accountant should be consulted about the following:

(1) Gift taxes;

(2) Reassessment for property taxes;

(3) Capital-gains taxes, now and in the future;

(4) How both sides of the transaction will be "booked" by the parties; and

(5) Fraudulent transfers for hinderance or avoidance of creditors, present or feared.

Also, be sure any insurance covering the property is rewritten to reflect the new ownership.

Mr Whipple is quite correct. Some of the tax issues can be solved if the same person who owns the property is also the current 100% owner of the LLC. But be careful, don't set up a "straw man" corporation just to hold this one piece of property to avoid creditors, as Mr. Whipple pointed out at number (5). This can be considered a fraudulent transfer and can be unwound by a court. The LLC needs to conduct more business than just holding title to this piece of property.

If you would like to discuss this matter further in a more private forum, please feel free to contact me directly at the email address provided by LawGuru or through our firm�s website located at PasadenaEstatePlanning.com

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