Legal Question in Real Estate Law in California

Re: Incorporating Properties and Protecting Ownership

You need a written partnership agreement and there are many reasons to incorporate (one or more)

Joel Selik

800-894-2889

Re: Incorporating Properties and Protecting Ownership

It is not necessary to incorporate, but incorporation (or use of a LLC, or limited liability company) affords you additional protection from liability. If the property is only in the name of one partner, the partners who are not on title may have a very, very difficult time demonstrating they have an ownership interest in the property. You should create partnership or LLC documents to, at a minimum, demonstrate that each partner has an interest in the relevant property. If you don't want to change title, you can create a "memorandum of agreement" which summarizes key terms of the agreement and puts the world on notice that ownership is subject to a non-recorded agreement. See a real estate attorney for assistance.

Re: Incorporating Properties and Protecting Ownership

You probably want to choose a different form -- i.e., corporate, LLC, LLP. You want to limit your liability and guarantee your interest. Right now the properties are in various partners' names and that is risky. You may contact me.

Re: Incorporating Properties and Protecting Ownership

Why are you doing this without an attorney to advise the partnership on these matters? This is not the way that people do business and make investments if they are smart. Get yourself an attorney to handle these matters for the partnership.

Re: Incorporating Properties and Protecting Ownership

Answers to questions in order:

1(a). It isn't necessary to incorporate, but it's foolish to do business as a general partnership, especially one without a written agreement, one that is losing money, and one where documents such as deeds exist that conflict with the partnership concept.

1(b). Yes, you need protection from creditors, potential creditors, and each other.

2. Before you write any documents that purport to convey interests back and forth between yourselves and your partnership, you need to give careful attorney-guided thought to whether you should be doing business as a general partnership (an LLC seems appropriate, but you could also consider an LLP or an "S" corporation, or perhaps separate entities for each property), whether the deeds of trust allow this kind of transfer, and what effect the transfers might have on taxes (both income tax and property tax issues could arise).

There is way too much money and credit in play in your activities to be stingy about paying an attorney to document things properly and to advise you. Indeed, perhaps each of you should have his or her own legal advisor, as there may be conflicts of interest.

Re: Incorporating Properties and Protecting Ownership

What you need to do is higher an attorney who is expertise in real estate Locke/business and that the law/taxes and probably, estate planning. These areas many cases overlap. Far too many questions, far too many sophisticated answers necessary they can be done in a form such as this. You need expert opinion given all of the facts to the attorney said that he/she can advise you properly under the circumstances. your choice of the business entity cannot be done willie nilly. if you make the wrong decision it could be catastrophic in terms of future property transfers, taxes and other effects on your personal lives. You must take us much more seriously and you must duet with the aid of an expert attorney. Just seeing your asking these questions means you don't know what you're doing, come to that reality. I have been practicing law in this legal area for over 30 years and understand your problem well. I practice in the S.F. Bay Area and if you wish to contact me call at 925-945-6000.