Since corporations are legal persons, they can hold title to real property in their own names just as individuals can. This means your organization, once it is incorporated, can buy and sell any type of real estate. Like any land transfer, the deed must be properly recorded. The rules for recording real property transfers differ between jurisdictions, but some general rules apply in most areas.
Until your corporation is officially created, it has no legal status and cannot participate in a land transfer. Even if you are planning to incorporate soon, your corporation cannot own land until it is legally created under your state’s laws. Generally, this means you must file articles of incorporation with your state’s business registration office and pay a registration fee. Your articles of incorporation establish your corporation’s name, registered agent and other information as required by your state’s laws. Once your corporation meets your state’s legal requirements for incorporation, it has the legal status necessary to accept a land transfer.
Before your corporation purchases land, you must draft a real estate sales contract between the corporation and the seller of the real estate. Since it is the corporation, rather than the corporate officers in their personal capacity, the contract must list the name of the corporation as the grantee, or buyer, of the real estate. A real estate contract describes the land being sold, terms of the sale and must be signed by someone in the corporation who is authorized to represent the corporation in such transactions.
Real Property Deed
To actually transfer the real estate into your corporation’s ownership, you must obtain a deed from the seller. A deed contains the legal description of the property being transferred. Your deed must list the seller by name and identify the legal name of your corporation as the buyer. A deed can be drafted by a lawyer, title company or document preparation service. At your real estate closing, your corporation exchanges the deed for payment, meaning the corporation gets the deed and the seller gets paid the amount specified in the real estate contract.
Filing the Deed
Once you acquire the deed pursuant to the sales contract, you should record the deed with your state as evidence of the land transfer. Typically, deeds are recorded with the recorder or registrar of the county in which the purchased land is located. This is true even if your corporation’s main office is not located in that county. You may have to pay real estate transfer taxes to record the deed, and your state may require your corporation to file an Affidavit of Property Value to document the property’s value and accompanying tax payment. Generally, counties require payment of a small recording fee. Recording procedures vary between counties. For example, some counties require your corporation to create a special cover sheet to record the deed. Once the deed is properly recorded, your land transfer is complete.