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Hilton Head Law Firm

Limited Liability Companies - Use With Real Estate Ownership

When purchasing property in South Carolina for investment purposes, you may wish to consider holding title to the property in a South Carolina Limited Liability Company (an “LLC”), because doing so can provide significant benefits. For example, an LLC can:

  1. Limit your liability arising from use or ownership of your property.
  2. Avoid Probate in South Carolina.
  3. Avoid Probate altogether (in coordination with a Revocable Living Trust).
  4. Spread ownership without loss of control.
  5. Maintain ownership anonymity. .
  6. Prevent personal creditor interference.
  7. Permit conveyance of ownership of property, or an interest in it, without significant documentation or cost.
  8. Create income tax flexibility (a Single Member LLC can avoid fililng income tax returns altogether).

One glitch in the use of an LLC is that some Lenders will not make loans directly to an LLC, although many will. Some Lenders who will not lend directly to an LLC will permit you to take out a loan in your name personally and title the real estate in the LLC; others will permit you to undertake the loan, and take title, personally and then allow you to transfer title to the property to the LLC (although technically that is a violation of the mortgage terms).

Creation of an LLC involves securing an approved name, securing someone to act as your registered agent in South Carolina, preparing the Petition to create an LLC, securing execution of the Petition, filing the Petition, Preparing an Operating Agreement, undertaking review of the Operating Agreement and securing its execution, securing a Record Book and preparing the initial Minutes, and securing a Tax Identification Number when appropriate. The Operating Agreement contains all of the rules governing the LLC, similar to a partnership agreement. As you would expect, the Operating Agreement for a multi-person LLC will be more complex than one for a one-person LLC.

An LLC provides significant benefits over a Subchapter “S” corporation. It is much more flexible, it is not bound by the statutory rules relating to corporations, and it provides a greater opportunity for tax write-offs. Currently it is the entity of choice for liability protection.

If you have any question, or if you would be interested in having us create a Limited Liability Company for you, please contact us at your convenience.