Updated over 6 years ago on . Most recent reply
LLC vs Tenancy in Common
My business partner and I are under contract for a multifamily property. He is putting his half of the downpayment from funds from a 1031 exchange. He was told by the 1031 agent that we cannot form an LLC for the first year and must instead proceed in a Tenants in Common agreement for the first year and then may transfer into an LLC. Has anyone else heard this? Neither our lawyer nor accountant has heard similar, and I wasn't able to find this information on the forums. TIA
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@Tyler Brown the 1031 agent is correct. Experienced a similar thing a few years ago. If it is 1031 exchange funds they can't co-mingle with other monies, which would be the reason for the TIC. A syndication attorney can confirm this. (this is just my opinion and experience)