1. Is it a good idea to buy a mobile home park by just transferring ownership interest of the existing LLC established in 2008?
I will buy the LLC and transfer the entity using the Texas amendment (Form 424), In the amendment we will relinquish the current owner's membership interests and to my partner and I.
2. What happens to the title insurance? Can I leave it in place?
Cliff notes: We are buying a mobile home park. The owner is financing 75% and we are putting 25% down. The seller offered to simply transfer all ownership interests of the LLC to me via amendment (Texas Amendment Form 424) and is wondering if we need new title insurance?
@swat khan There are some legitimate concerns in simply buying the current owner's membership interests in the LLC. A big concern is that you are buying the company's liabilities as well. So be sure to do some due diligence before taking ownership of the LLC. Also, I quickly glanced at the Texas form you suggested. It wont effectuate the ownership transfer; it can, however, effectuate the change in management. Have u considered doing an asset purchase agreement? Take all of the assets and leave the liabilities behind (who knows what liabilities are tied to that llc, e.g., debts owed, lawsuits, etc.)
I would buy the park and not the LLC. Any open lawsuits or ones that former tenants are considering against the LLC would be inherited by you.
While the seller might have good intentions (simplify the transaction, save money on closing costs, title insurance and legal fees), but this is typically a great way to dump undisclosed entity problems to an unsuspecting new buyer.
You absolutely need to get a new LLC, if the seller objects, you can offer to pay his side of the closing costs, but I would go through your due diligence findings once more as this would be a red flag for us.
Best of luck.
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