Individuals seeking to transfer their Florida property to their limited liability company (LLC) or corporation have a few options. The one that works best for you will depend on your current situation and goals. Owning real estate in a properly formed and maintained LLC or corporation is preferable for many people because it limits their exposure to personal liability.
The process requires that the property owner first create the LLC or corporation if they do not already have one. This is best done with the assistance of a Florida real estate and business attorney to ensure that the company is properly formed. Once that is done, the title of the property can be transferred into the name of the company. Having professional assistance to transfer your property to an LLC can help you avoid costly and time-consuming mistakes that are easy to make when you aren’t familiar with the relevant Florida regulations and procedures.
Creating the LLC or Corporation
The first step in this process is to form the LLC or corporation that you want to transfer the property to. If you already own the corporate entity and wish to transfer your property to your existing company, then you can skip this step. Otherwise, the corporate formation process involves:
- Choosing a name for your company
- Selecting a registered agent
- Creating and filing your articles of organization and paying the fee
- Obtaining an employer identification number (tax ID number)
- Creating an operating agreement or shareholder agreement/bylaws
It is also best to consult with an accountant before you form the company to ensure that the company has the ideal tax structure for your specific business or investment goals.
Transferring the Property to the Company
Once your company is established, you can begin the process of transferring the property. If you have a mortgage on the property, you should contact the lender and notify them of your intent to transfer ownership. If the transfer is not authorized by the lender, you run the risk that the transfer will violate the mortgage’s due-on-sale clause, even if no funds are being exchanged for the transfer.
You must also determine which type of deed to use in the transfer. Two popular options are quitclaim deeds and warranty deeds.
- Warranty Deed: Warranty Deeds include an assurance that the title is free and clear of any liens or claims.
- Quitclaim Deed: This deed type does not offer any promises about existing claims or liens on the property.
You will then complete the transfer by filing the appropriate deed transfer documents with your county recorder’s office. Another important step that can often be overlooked is updating the property’s insurance policies and documents. Insurance policies, property management agreements, leases, and any other contract or policy involving your property will need to be reviewed and potentially updated to reflect the change in ownership.
The Risks of Transferring Property to a Company
There will always be risks associated with any real estate transfer, but understanding the risks can help you make an informed decision. For example, your property’s value may be reassessed for tax purposes if you transfer it to a company. It’s best to contact the property appraiser’s office for the county where your property is located to get further information on that.
Homestead property (i.e., your primary residence) should not be transferred to a company because you will lose any homestead tax exemptions. Homestead property already offers protection from most creditor claims so it does not need to be transferred to a company.
How Farshchian Law Can Help
It is always a good idea to discuss property decisions with an experienced Florida real estate attorney to minimize risk. Farshchian Law assists individuals and companies with a variety of Florida real estate and estate planning matters. To learn more or to schedule a free consultation, contact us by calling (800) 604-1871 or email us at Info@JFRealEstateLaw.com. We offer real estate, deed & title transfer, and estate planning services throughout the State of Florida.