How to Place Property in an LLC

By Jeffry Olson, J.D.

How to Place Property in an LLC

By Jeffry Olson, J.D.

A limited liability company, or LLC, shields its owners from personal liability. Many owners, also called members, seek to place property in their company to reap the benefits of this personal liability protection. But this legal business entity is only allowed to hold property in its own name, not in the names of its owners. To place property in an LLC, its members must transfer the property to the company's account.

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Placing Property in an LLC

The process for placing, or transferring, property to an LLC begins by determining the type of property that's involved. Real property and vehicles require a deed transfer, while financial and personal property call for a transfer of assets. Here's how property is transferred with regard to each one.

Real Property and Vehicles

Oftentimes, LLC members who own real property, such as an office space or a building, want to extend the limited liability protection this legal business entity affords to their property. The same can be said for vehicles. Here's what you need to know about transferring real property and vehicles to your LLC.

1. Prepare the paperwork that transfers ownership. For real property, execute a deed that transfers ownership to the LLC. Any insurance on the property must also be transferred into the name of the company. For vehicles, because the name on the title demonstrates ownership, place the title under the company's name to transfer ownership.

2. File your completed paperwork with the appropriate state office. Deeds must be recorded with the County Recorder, or similar office. It must comply with any rules of this office as well as property tax law requirements. If the owner still owes money on a note and mortgage, transferring the property may trigger an acceleration clause in the mortgage, which would require the immediate payment of any money due to the lender. If this may be an issue, review the language of your mortgage or contact your lender directly. Your lender may work with you to ensure a smooth transfer without triggering the acceleration clause. For vehicles, register the transfer with the Department of Motor Vehicles, which will issue a new title in the LLC's name.

Financial and Personal Property

Members of an LLC frequently wish to transfer financial or personal property to their company. The easiest way to transfer ownership of cash or financial property to your business is by moving the asset from the account of the original owner to an account that belongs to the LLC. With regard to personal property, this can be accomplished by physically transferring the tangible asset to the company and using a bill of sale or a similar legal instrument to confirm the sale.

The process for transferring property to an LLC depends on the nature of the property being transferred. Remember, any property transferred by an owner to the business must be tracked as a capital contribution. Transfers of property may also have tax consequences. As always, consult with a qualified, experienced tax professional for further guidance.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.