Columbus, OH asked in Business Formation, Business Law and Real Estate Law for Ohio

Q: Does transfering property into an established Partnership-LLC affect ownership levels, like initial capital contribution

If I were to be in a partnership LLC, and my partner wants to transfer a property into the company, would that automatically affect his amount of ownership like an initial capital contribution would? Or is there a choice to not give over ownership for the contribution to the company

The property would be used for income generation for the company.

This is mainly hypothetical for the future, and there is no current operating agreement

1 Lawyer Answer
Nicholas P. Weiss
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  • Cleveland Heights, OH
  • Licensed in Ohio

A: This first question is "what does your operating agreement say about it?" If you don't have one, then the question becomes whether this is being transferred for value received, transferred without value, and why the transfer is being made.

If it is being made for value from the partnership, then it would not be a capital contribution, it would just be a purchase. If it is for no value, then we have to determine whether this is a true asset of the LLC, whether it is being used for income producing purposes, business location, or is just sitting there. If he's using it just to shield liability for his own property, then that is not a capital contribution.

Talk with your partner about whether this is intended to be a capital contribution. Most capital contributions are cash, but in limited cases it can be for assets.

Cesar Mejia Duenas agrees with this answer

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