Q: My 2 sons and I wish to purchase land for hunting and possibly putting a small retreat home on. Should we form an LLC?
We will be equal owners of the property and want to ensure that the land is not split up and kept in the "Family". Should we form an LLC since we will share the payment load or some other partnership? Should we get pre-approved for the loan first or should we wait till we form the LLC and get the loan through that?
A:
It is an interesting way to avoid the problems, down through the generations, which are likely to happen with simply being co-owners. I suggest that you get an attorney to draft the operating agreement, being sure to address concerns as:
1) how the LLC is to be wound-up and the property sold should any owner want out;
2) transfer of ownership shares upon the death of an owner of the LLC. It might be possible to avoid probate.
The LLC itself, because of limited liability, may not qualify for a loan; you might need to co-sign the mortgage note individually. So pre-approval of the loan (I assume you mean approval of each one individually) might not help much if you actually intend that the LLC own the property.
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