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CalAttorney2
CalAttorney2, Attorney
Category: CA Real Estate
Satisfied Customers: 10237
Experience:  I have experience representing HOAs, homeowners, businesses, and other individuals in real estate matters.
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I purchased a home in my LLC with the intention of moving in

Customer Question

I purchased a home in my LLC with the intention of moving in with my family as my primary residence. I purchased the property procuring my own funds and excluding my LLC partner from ownership. It was agreed upon from the beginning that he had no ownership in the property and was also therefore not responsible for paying back the investor, whom is a family member of mine. While doing a cash out refinance the bank required me to move the property into my own name along with my wife. My partner deeded the house to my wife and I, and my partners wife quitclaimed off first to show proper chain of title. I have a few separate questions, one being how to try to avoid taxes and the other on the proper contract or verbage to amend the operating agreement to exclude my partner from any ownership of this property in question. First off I need to supply the bank that is doing my refinance with a contract stating my partner had no ownership interest in the property and then I will do a letter of explanation as to why he forfeited his interest. I need some kind of guidance on what to do and or if I simply shot myself in the foot and I am stuck...
Submitted: 3 months ago.
Category: CA Real Estate
Expert:  CalAttorney2 replied 3 months ago.

Dear Customer,
Thank you for using our forum. My name is ***** ***** I hope to assist you today.

While you can likely create a proper "paper trail" (document the intent for the ownership of the property through the LLC), you are likely going to have a tax issue - the transfer of the property from the LLC to you and your wife is a taxable event.

I would recommend retaining an attorney to help you draft these documents for you - not so much because you need a lawyer to write each document to show the title, but for two separate reasons (1) an attorney will do so more efficiently (avoid duplicate or unnecessary documentation - such as quitclaims that aren't really necessary); and (2) they can help structure the transfer to minimize any tax liability that will exist (so while you probably cannot avoid tax liability - you can minimize it - this is a strategy issue and unless you are very familiar with property and sales tax laws for your state, it is worthwhile to have a professional do this for you (you will probably save more on property taxes than you will spend to have the lawyer evaluate your situation, determine what steps are actually necessary, then draft up the appropriate documents).

You would be paying the lawyer for their knowledge, not for their document writing skills (although having the documents properly prepared is a huge benefit).

You can find local attorneys (a general practice attorney will be appropriate, but if you want a specialist, find a transactional property law attorney - specialists usually charge more) using the State and local Bar Association directories, or private directories such as www.AVVO.com; www.FindLaw.com; or www.Martindale.com (I personally find www.AVVO.com to be the most user friendly).

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