Q: Hi, Md. gen. family partnership wants to trans. land into an LLC, said LLC to be owned by two corps.
Two corps. owned by same family members in same percentages.
LLC would be owned by corps., not the exact same people, but those same people own same respective percentage of shares.
Does partnership have to consolidate or dissolve?
What exceptions to transfer and recordation taxes, if any?
What deed recitals?
What other forms to transfer without taxes?
Can you recommend title company?
A:
Most real estate lawyers should be able to assist with such a transfer and the applicable deed affidavits and forms.
The transfer you describe (from a general partnership to 2 corporations owned by different owners than the general partnership) sounds like it would be subject to transfer/recordation taxes.
The default rule in Maryland is that ALL deeds are subject to transfer and recordation taxes. Just because the same family members will be in some fashion involved with the various entities does not automatically make a transfer between the entities exempt. A transfer may be exempt if it fits one of the specific exemptions set forth in the Tax-Property article. Sometimes a transfer from a partnership to an LLC is exempt. Per statute, exemption applies if "the members of the limited liability company are identical to the partners of the converting general partnership" (See Tax-Property 12-108). Your description does not seem to fit although you could always contact the relevant transfer tax office if you have further questions about the applicability or calculation of transfer taxes.
Our law firm assists with LLC deeds, including those related to a discontinuation of a real estate enterprises, as I'm sure do others. You may wish to reach out to a real estate attorney or title company of your choosing.
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