I am a California attorney.
You will have to register as a foreign LLC operating in California, because that is where you are doing business. The fact that the LLC buys California property using a California Realtor; hires California contractors; and sells the property using a California realtor means that the LLC is doing business in California, even if no person employed by the LLC is doing that work.
That means that the setup that you are proposing is going to cause you to be heavily taxed in California, regardless of what Nevada does. California will tax you it's minimum LLC tax rate of $800 an entity. For LLCs, that starts the first year.
I would like to suggest the following as a more practical option:
(Q1) If the company (regardless of its structure) is formed in NV, does that mean law suits against the company have to go to NV court and follow NV law?
(A1) No. In fact, if a lawsuit involves problems with, or title to, real property in California, Nevada courts would decline to exercise jurisdiction.(Q2) When people say NV is a pro-business state, it's basically saying NV laws are pro-business. But what happens to a NV company operating in CA? If CA law prevails, why do people still form companies in NV? For instance, all venture capitalists require the startups they invest in form the company in one of those pro-business states (Nevada, Delaware). There getta be advantages of forming the company in one of those states and register as foreign entity in CA.
(A2) The reason that you are not able to take advantage of the pro-business laws in Nevada (and I agree that those laws are pro-business) is that you are dealing with California property, licensed California contractors, and licensed California real estate professionals. Furthermore, by doing business in California, you submit to personal jurisdiction in the state.
The difference with venture capitalists fund businesses, not buy property and develop it, or rehabilitate it. (Q3) Could you give me a few examples? or point me to some references. I am willing to do my own dilligance to read on this subject. I just need some pointers.
(A3) I'm not sure what you are asking for, but the legal concept of Subject Matter Jurisdiction (what Courts have the jurisdiction to hear a legal dispute, and why) is the subject of a semester of law school - it's covered in Civil Procedure, which is a 1L subject. This particular topic is also covered in Real Property, which is generally a 2L course.
I haven't been able to find free law school materials that cover this topic.
Here is a list of Law Review articles covering this topic: http://scholar.google.com/scholar?hl=en&q=%22real+property%22+%22subject+matter+jurisdiction%22+California&btnG=Search&as_sdt=2000&as_ylo=&as_vis=0, but there is a charge to view most of those articles.
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