Transferring assets to an LLC, or limited liability company, is not as difficult as you may think. Even though there may be legal or procedural differences between them, an LLC is an entity that may acquire property in the same manner as a corporation or limited partnership. A corporation consists of officers and a board of directions, a limited partnership consists of general and limited partners, while a limited liability company is comprised of a member or members and sometimes a manager. The method for transferring assets into the various entities is essentially the same.
Prepare or have your attorney prepare a deed conveying real property from the seller to the limited liability company. Unless prohibited by its formation documents, a limited liability company may buy and sell real estate. If the LLC is acquiring title insurance, the title insurance company may require copies of all organizational documents of the company, as well as a certificate or resolution signed by all members of the LLC reflecting their consent to the acquisition of the property by the company.
Read More: How to Convert a Partnership Into an LLC
Convey some types of personal property with a bill of sale. If the LLC is buying the personal property assets of a business, a bill of sale may be executed from the seller to the LLC. Bills of sale may convey equipment, rights to the name of the business, automobiles or any other items of personal property. In the case of automobiles, the certificate of title must also be executed by the seller conveying the vehicle to the LLC, and the LLC must register the vehicle in its name. There may be other applicable rules and regulations depending on the type of property.
Acquire a leasehold interest in property. If the asset being acquired is the lease of a building, then an assignment of leasehold interest may be executed from the current lessee, or tenant, to the LLC. Assigning or transferring a tenant's rights in a lease from one party to another will often require the consent of the original lessor, or person who actually owns the building being leased.
Convert your partnership to an LLC. In the event you are one of the partners in a partnership and you, along with other partners, desire to form an LLC, some states will allow you to file forms converting the partnership to an LLC. Depending on the state, conversion may mean that all assets of the partnership now belong to the LLC without the necessity of transferring a title. Appropriate conversion documents, however, should be filed in the county records office to ensure that the transfer of any real estate formerly owned by the partnership will be located in a search of the public records.
The services of an attorney may be required to prepare legal documents of transfer.
Seek the advice of an accountant to discuss any tax issues involved when acquiring property in an LLC. The LLC to which you transfer assets must be formed according to laws of the state where the LLC is located.
Marie Murdock has been employed in the legal and title insurance industries for over 25 years. Murdock was first published in print in 1979 and has been writing online articles since mid-2010. Her articles have appeared on LegalZoom and various other websites.