What is the best way totitle and holdreinvestment property?

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

What is the best way totitle and holdreinvestment property?

I am interested in purchasing a residential investment property, includingmy daughter’s name on the title – with right of survivorship. However, initially, I would incur and recognize all profits and losses. Could joint tenancy be used with some type operating agreement or would this need to be tenants in common?

Asked on July 14, 2011 under Real Estate Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

You would probably be better off creating a limited liability company (LLC) or a sub-chapter S corporation (Inc.) which you and your daughter would own, and then have the company/corporation own the property.

1) First and foremost, it will provide for limitation of liability: you and your daughter will not be responsible for debts or causes of action against the property (e.g. suppose someone slips and falls; suppose you don't pay a contractor and he sues you; suppose you default on a mortgage or property taxes), except to the extent that you may have to personally guarantee some loans (like a mortgage, if you have to guarantee one to get it).

2) With an LLC, you can determine in the operating agreement which partner will incur losses or get profits; I'm not certain you could with a sub-S--there, it may be automatically apportioned according to relative ownership--so an LLC may be better of the two.

3) Both LLC and sub-S's are pass through entities for tax purposes, so you won't face corporate double taxation and can take profits/losses as if they were your own.

4) You can easily structure and set up succession planning, for what if one of you passes.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption