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Forming the Limited Liability Company to Purchase Real Estate

Ways to minimize or eliminate risk when forming a Limited Liability Company to transfer real property for management and protection or to purchase real property.  They include: 

  1. Hazardous Materials Report.  Obtain a thorough report on the presence of hazardous materials on commercial property and take necessary steps to remediate the problem before taking title.
  2. Title Report. Make the contract contingent on the results of a title search report, obtaining title insurance and reviewed of the proposed title commitment for potential title issues. 
  3. Seller Authority. Obtain proof and representations that the seller has authority to sell the property. 
  4. Insurance.  Insurance professional to provide prices and suggestions for insurance on the property. 
  5. Condemnation. Determine if there are any litigation or condemnation issues concerning the property. 
  6. Loan Commitment. Review the loan commitment and loan documents to avoid clauses that fie the lender the broad authority to foreclose. 
  7. Other Rights of Lender.  Review the loan documents for "insecurity" clauses and due on death provisions and other broad reaching powers of the lender to call the loan when there is no payment default. 
  8. Pandemic.  Include clauses in leases that pandemic events are not a basis to break the lease or cause a reduction in rent. 
  9. Goals of the Business.  Determine whether there are legal, practical or commercial obstacles to accomplishing the proposed goals of the business. 
  10. Contingency. The contract to be contingent on a study period during which the buyer can obtain all of the leases on the property, operating expenses and deferred maintenance problems to determine if the property will produce the promised cash flow. 
  11. Investors.  If several investors are putting funds into a property to buy real estate provide that each of them will have management responsibility in such a way that avoids the investment being deemed a sale of a security. 
  12. Regulation D.  If the investment is a security under federal and state securities laws, provide a disclosure document. 

Avoid falling into or using a general partnership.  In a general partnership, each partner is liable jointly and severally for the debts and liabilities of the partnership and the torts (personal injury) of the other partners while in a partnership business. 

If you wish to discuss how to protect your real property investment, please contact The Law Offices of Gayla K. Austin at 307.200.1914.   Thank you. 


I offer a consultation over the telephone. I further offer a diagnostic interview in which we will meet in person and go over your documents.