LLC buying property in Ohio,
Getting ready to buy my first property all cash in my LLC. I have a 2, LLC's that own each other. I am just a member. I have been working with the title company who wants me to changes this to purchase the property and put my name as the manager. I explained why I did this. The title Co is at a loss, has anyone ever done this and how did they purchase the property? Totally newbie, so I might be missing something, any help and guidance is appreciated.
Thanks, Deb
I'll try to be helpful but you may not like my first few comments.
If you are a newbie, do you need so much structure? Good insurance, particularly with an umbrella liability policy provides very adequate protection on smaller assets. Also, half of all LLCs get thrown out in court because they aren't managed correctly. You need to properly maintain all this structure or it just gives a false sense of security.
Secondly, why all cash? Properties with no mortgage tend to be lawsuit targets. Also, your total returns go down without any leverage because you lose the multiplier effect of appreciation.
Now, to answer your question. (Note: I'm not a lawyer, but this is my understanding based on my experience) A human being will need to sign on behalf of the LLC and that human will need to have the authority to sign. If you are the only member, you probably have authority. (LLCs that own each other doesn't make sense because then there is no human owner.) If you do not want your name to show up anywhere on the closing documents, you would need to get a power of attorney to allow someone else to sign on your behalf. I recommend talking with your attorney about this.
Good luck
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#1 Personal Finance Contributor
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Quote from @Debra Gross:
Getting ready to buy my first property all cash in my LLC. I have a 2, LLC's that own each other. I am just a member. I have been working with the title company who wants me to changes this to purchase the property and put my name as the manager.
At first glance, it seems title just wants you to be a member-manager which hopefully is an OA modification (not public) that can be amended back later if you want to for whatever reason.
Do they want you to take title as xLLC, your name as manager, like a trustee of a trust? That I wouldn't do.
I haven't had entities as members of my entity. People have been the only members or governors. For public anonymity with the SOS, LLCs often name their attorney as agent.
I know the IRS asks about entity vs personal members and if they're foreign or not specifically on the 1065 and other tax forms. Sometimes people over-sophisticate their way into a PITA.
I'd ask title if I can just amend the OA of the primary LLC to be member-managed. Hopefully you won't also have to change it with your SOS.
Thank you all so much. I did ask if I can amend, the OA with a resolution and they said yes? Thanks for all your help. Love bigger pockets.
Hi Debra,
Based on your post, it seems like you created a Hub and spoke structure for your LLCs. This is what you described when you said that you have an LLC that is managed by another LLC. This is fairly common when people want anonymity. The Hub is usually based out of a State like Wyoming that offers anonymity for Managers. I am not sure that I understand the title company's issue, as you are probably personally the Manager of the managing LLC. It would simply be another level up from the LLC taking title. You may be able to explain the situation and avoid making alterations to your LLC. If the title company requires that you become the Manager of the spoke LLC, you would have to amend the Operating Agreement, and, possibly, you will have to amend the Manager of the LLC with the Secretary of State (depending on the State).