All Forum Posts by: Christian Carson

There are some problems here that might result you getting mired in a negotiation mess. The ideal situation involves the buyer signing a purchase agreement for the property, then the plaintiff in the partition action electing to purchase the whole interest in the property at its court-appraised value in order to consummate the sale. If the brother also elects to purchase the property at appraised value, then the court will probably order a public auction which the buyer would have to try to win the bid.

While it is true that filing the articles of organization to register the name of your LLC is easy, that is only one step in the process of creating a legally sound entity that actually functions the way you want it to. I discussed the importance of the operating agreement here and here. A partnership should be treated like a marriage, and a single-member LLC should function as a component of your estate plan.

If you want your seller to give you better warranties, you have to get him/her to re-execute the deed, and probably buy title insurance. You can buy title insurance anyway, without conveying the property, so that's an alternative. It's probably not going to affect marketability if the title search does not turn up any defects.

Title and deeds are two different things. Title is the concept of rights associated with owning property, and the deed is a document evidencing transfer of title. Title, when good, allows you to legally keep others off your land. A deed without title is void.

Warranties of title are what differentiates the general warranty deed from the special warranty deed to the quitclaim deed.

In the time before real estate gurus and do-it-yourself deed prep kits, there were rules about when which deed was appropriate to use.

General Warranty Deed
When a property is conveyed to a purchaser for value, the buyer usually demands that the seller promise, or "warrant" that s/he has good title to the property, and that the buyer won't be harassed by any claims on their title. This warranty goes all the way back to the beginning of time, or the "root of title" as we call it. The seller usually pays for the buyer to get title insurance in order to insure against the risk of any adverse claims.

Special Warranty Deed
This deed didn't used to exist, but came into vogue for foreclosure sales and the like. The seller of this property promises or warrants that the seller didn't impair the title of the property while the seller owned it. No mention is made about any impairments or claims against title before the seller owned the property. 

Quitclaim Deed
This deed has traditionally been only used to cure defects in title -- like when a grandson may have inherited at 1/335 share in a property, but no one is really sure whether that's true, and a buyer has come along and needs to get the signatures of all the possible heirs before being secure in his title. These types of interests are typically not insurable, which is why the quitclaim deed is used. 

Here's my nit. The increased use of quitclaim deeds for bona fide real estate transactions is making title work more complex, and in turn, more expensive. A warranty deed is a good indication that title insurance was purchased, so a warranty deed was traditionally reliable for issuing title insurance. If a property has a string of quitclaim deeds, I might have to follow the root of title back many more years.

You need a portfolio lender. I have one that lends to my multi-member LLC at 6.5% fixed, 15 year terms. It's a bank, and they have their own loan committee.

If your accountant is charging you significantly more because you own an SMLLC, you'd better shop around. An SMLLC is a disregarded entity for federal tax purposes.

As for whether the LLC is a bad thing, it depends on your state. Ohio requires no annual maintenance fees, so it's about a wash here. A well-formed LLC (read: not using Internet forms) is absolutely critical to a real estate partnership, if your state's laws don't make another limited-liability entity more attractive.

 One of my great long-term real estate bets counts on them cleaning up the inner-city beaches. ;)

 Hey, I'm an attorney and I collect my own rents, that must mean I'm paying myself $250/hr to open mailboxes... ;) To my tenants, I'm just the property manager...

LLCs are great for certain applications. Not necessarily for holding your primary residence, though some people do it.

These are real issues that have been written about ad nauseum in law journals over the past twenty years, ever since the first series LLC statute was enacted in Delaware in 1996. These issues still remain unaddressed.

You may not have had problems in your very specific situation, in your specific state. I want nothing more to state in very strong language that this is not sound advice for all 50 states. It takes only one negative bankruptcy court ruling for the house of cards to come crashing down, and for the faults of the statute to be exposed. 

Yikes! Using a series LLC to hold real property in a state that does not recognize the series LLC is a dangerous affair. I wrote about the series LLC a few weeks ago on my BP blog. It's also notable that no bankruptcy court has ever had to deal with the bankruptcy of a single series within a series LLC. Should the entire LLC's assets be dragged into the bankruptcy estate? If that does happen, doesn't that defeat the purpose of what we're trying to do?

LLCs still have to register as a foreign LLC in most states before they can own property. Most people skip this step and realize their mistake when their eviction cases get thrown out of court because their foreign LLC is not permitted to do business in their state. Although we haven't seen any information on this yet, I'd bet that those states that don't recognize the series LLC might just ask for a registration fee for each series, as what government entity can turn down an opportunity to squeeze more administrative fees from the people?

I'm not going to opine on the original poster's specific situation because I don't know all the facts -- but I'll tell you that I use a single management LLC for my Ohio rentals, and I try to use as few entities as possible. I only create a new entity when I work with a new partner.

"Cleveland’s housing market has been called a lot of things the past few years, but the debut of a housing index by the Columbus-based Nationwide insurance and financial services firm terms it something different — healthy."

This article's focus is on forward-looking expectations of individual housing markets. Areas with good price-to-rent ratios and high affordability are expected to outperform red-hot coastal markets in terms of price appreciation.

Read more: http://www.crainscleveland.com/article/20150331/FR...