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CalAttorney2, Attorney
Category: Business Law
Satisfied Customers: 10244
Experience:  I am a businesses law attorney, with experience advising and representing owners and investors.
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I work "company" with 3 owners. They recently purchase a

Customer Question

I work for a "company" with 3 owners. They recently purchase a property (with a recreation business on it) together but have yet to setup an LLC because there are issues with the third owner and the other 2 are trying to get him off of the property paperwork (he has no financial interest in the property). Can they legally go ahead and set up the LLC with just 2 of the owners or do they need to retain an attorney to legally remove him from the deed before they setting up the LLC and opening the business for operation.
Submitted: 1 year ago.
Category: Business Law
Expert:  CalAttorney2 replied 1 year ago.

It is possible to create the LLC entity without actually having the property title issue cleared up first.

I am not sure what your employer's goals are, but if they need the entity for operating purposes now (which is not uncommon), they can set their LLC up and start using this entity for all business purposes (even transfer their interests in the property if they want to - although that is a strategy call, that may or may not be wise).

After they get their title issues straightened out, either through negotiations or with a quiet title or a partition action, they can then transfer the title to the LLC that they have created.

I always recommend that businesses utilize an attorney to help them set up their business entity. Many businesses try to save money by using "do it yourself" type services online or even using the CA Secretary of State's free forms, but these forms are simply a regurgitation of the California Corporate Code and you lose all of the flexibility and many of the benefits offered by the LLC form (such as making specific designations of income/liability/assets, and more importantly making provisions for dispute resolution and dissolution (doing this while everyone is on speaking terms and working together is key, waiting until there is an actual dispute generally ends up costing far more than it would to spend a few dollars on an attorney to set up your governing documents properly in the first place).