Will a title co. indmenify this? - Posted by IB (NJ)

import · July 16, 2003, 3:36pm

Posted by Michael (NJ) on July 17, 2003 at 10:18:52:

No, an S-corporation does have shares of stock (same as a C-corporation). We can discuss the details when we get together; not sure if tomorrow works, but email me.

import · July 16, 2003, 3:36pm

Posted by IB (NJ) on July 16, 2003 at 15:36:10:

Hi all. In my attempt to sheild the detail of a purchase and/or sale of a property I intend to flip (take title and then sell shortly afterwards), I spoke with my attorney about either deeding a property to a land trust and selling the beneficary interest to my buyer (I still have to see if and how this is recorded with the county Recorder) or purchasing the property in a C-corp. and then selling the C-corp (it’s shares). He seems to think that selling the C Corp. is more practical but thinks I’m going to have trouble getting the title company to issue a policy either way. Your thoughts?

import · July 17, 2003, 9:00am

Re: Will a title co. indmenify this? - Posted by Michael (NJ)

Posted by Michael (NJ) on July 17, 2003 at 09:00:16:

IB:

I am not sure of the legal consequences of deeding the property to a land trust, although I can’t see why it would be a problem.

The bigger issue is the advice you are getting from your attorney to use a C-corporation to buy the property and sell your buyer the stock. I see two BIG issues with that set-up:

Your buyer’s attorney will more likely than not object to his client purchasing the stock of the C-corporation. If the buyer buys the stock, he is also buying any potential liabilities of the corporation. One example, if there was a “slip and fall” accident on the property while it was owned by the C-corporation and then you sold the stock to your buyer, he would inherit this problem.
The buyer’s attorney should object to his client buying a property by buying the stock for tax reasons. In most cases, C-corporations are a horrible entity for holding real estate, since they would subject the buyer to two levels of tax if he later sells the real estate. An LLC would be more appropriate for your buyer in this case, and your tax results as the seller would be the same.

I am surprised that your attorney did not alert you to these issues; is this the attorney you told me that you were not too thrilled with? Time to get a new attorney - FAST!

The tax impact gets complicated, and you have my phone number if you want me to explain why a C-corporation is a BAD idea in more detail. Besides, you still owe me a drink from last time!

Hope this helps,

Michael (NJ)

import · July 17, 2003, 10:21am

Oops I was wrong! - Posted by IB (NJ)

Posted by IB (NJ) on July 17, 2003 at 10:21:23:

I just got off the phone with him and he stated that he definitely wasn’t talking about a c corp. due to the tax liability. He also suggested that I get a liability insurance policy for the corporation and assign that policy to the buyer of the corporation.

import · July 17, 2003, 10:11am

Re: Will a title co. indmenify this? - Posted by IB (NJ)

Posted by IB (NJ) on July 17, 2003 at 10:11:35:

Hey thanks Michael! Yes this is the same attorney. He actually mentioned “a corporation”. I’m assuming he meant C corp. since the S corp. doesn’t deal with shares of stock, correct? Hey, how about that drink tomorrow (soda-pop for us non-drinkers)? I’ll email you.