How to Transfer Ownership After a Limited Liability Company's Termination

By River Braun, J.D.

How to Transfer Ownership After a Limited Liability Company's Termination

By River Braun, J.D.

State laws may often dictate how a limited liability company (LLC) should conclude business when its members terminate it. In many states, the business is granted a reasonable period to transfer property out of its name, pay final bills, and file final tax returns and other necessary documents for members to file their personal tax returns when they become due.

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A voluntary dissolution should include a plan for transferring real estate, titled property, and personal property from the LLC to other parties. In some cases, those parties may be owners of the business (referred to as members) or third parties who purchase the property directly from the business.

Transferring Real Estate from the LLC

If the company holds title to real estate, it must execute a deed conveying the interest in the real estate to another party. In some cases, a third party may purchase the real estate. If the business has not dissolved, it can execute the deed, after which the proceeds are then deposited into the business account for distribution to the members according to their ownership interest. If the company has dissolved, the process is the same, but the real estate attorney may add language that the LLC is dissolved, and this deed is part of the process to close the business.

If no third party buyer exists, the business can deed the real estate directly to the members. Each owner receives an interest in the property equal to their ownership percentage. However, transferring the title to the members can bring potential issues.

If a member dies before the company is dissolved, the member's interest may need to be deeded to an estate or to one or more heirs. After the real estate is apportioned to the members, they may not agree on how to liquidate the real estate. Obviously, it would be better to transfer the property to a third party, but that is not always possible or desirable.

Transferring Titled Property and Personal Property

Vehicles and other titled property transfers are usually accomplished with a bill of sale. The purchaser may be a third party or one of the members of the LLC. Before executing the title, owners need to review the operating agreement to determine who must sign the title to convey an entire interest in the property to the new owner. Personal property, including equipment and furniture, can be sold to third parties or members. In some cases, owners agree to divide the remaining property among themselves. The money from a sale of personal property should also be deposited into the LLC business account. The proceeds of the sale are then distributed to the members based on the percentage each member owns in the LLC.

Winding up an LLC that is already terminated can seem overwhelming. However, taking everything one step at a time can help you avoid mistakes that could become costly and time-consuming. Review the applicable laws on your state's Secretary of State website to identify what steps must be taken to transfer title out of a business that is already terminated.

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.