Walnut Creek, CA · Member since 2015 · 49 posts · 2 votes
I was wishing to close a property under an LLC with someone. The plans was to submit the initial offer under a designee name, myself, but specify it to close under an LLC name at the end, such as "123 Elm Streeet LLC". So I could go online an quickly setup the LLC in the mean time.
But I discovered the state's processing time for new LLC's is several weeks, and our close was going to be one week, is there any solution outside of extending my close period? Could it still close under the LLC name if it's not fully processed, as long as the name is available?
On your next one, set up the entity first as, say, some unique LLC name, close the acquisition, then rename the LLC.
If I understand you correctly, use a fictitious LLC name for the close? But then after the close, transfer it to the real LLC when it finishes being processed by the state?
Can you legally close under an non-existent LLC name though?
On your next one, set up the entity first as, say, some unique LLC name, close the acquisition, then rename the LLC.
If I understand you correctly, use a fictitious LLC name for the close? But then after the close, transfer it to the real LLC when it finishes being processed by the state?
Can you legally close under an non-existent LLC name though?
I'm not sure if I understand.
No, set up an LLC with any name unique to that state, use it to do the transaction, then rename the LLC after and set up another LLC for your next acquisition. "Lather, rinse, repeat, ..."
On your next one, set up the entity first as, say, some unique LLC name, close the acquisition, then rename the LLC.
If I understand you correctly, use a fictitious LLC name for the close? But then after the close, transfer it to the real LLC when it finishes being processed by the state?
Can you legally close under an non-existent LLC name though?
I'm not sure if I understand.
No, set up an LLC with any name unique to that state, use it to do the transaction, then rename the LLC after and set up another LLC for your next acquisition. "Lather, rinse, repeat, ..."
Not sure where you got the "fictitious" part ...
Does that help?
When you said to setup the entity with some LLC with any unique name, then rename it later, I thought that was the fictitious part. The first part. To put in a place holder name per say, then rename it later.
Why would I rename it once I set it up and put it on the closing paperwork?
And I'm still confused how that would solve the issue, that it takes several weeks to process a new LLC, it would not be ready in time for a 7 day close.
That's the whole point - get the LLC set up BEFORE you need it. As one of my mentors says, "Dig your well BEFORE you're thirsty." Use it in the transaction, then rename it.
Won't solve your current problem, but will be ready for the next transaction.
For your current issue, you may have to close it in your personal name or in an existing entity, then "sell" it to the LLC later so the lender can't complain or try to call "due on sale".
Rental Property Investor · Astoria, NY · Member since 2011 · 16 posts · 11 votes
9y
Jim - if you're ever in a pinch, another solution is to form an entity using a simple form LLC agreement for closing and at a later date amend it as the owners require. Certainly not the optimal solution (and I agree with David's suggestion going forward) but it can be helpful to at least get the deal done, especially if you're still negotiating terms with your business partner when the closing should occur. Have you talked to a lawyer about your planned operations, etc.? If not, it may be helpful for you to talk to a corporate lawyer in the state where you plan to form the entity to make sure you get the right documentation and understand the limitations of entities under applicable state law (particularly as the limitations relate to limited liability). Good luck!