QUESTION:
My best friend and I are purchasing an apartment building together. How should we take title to the property? What different ways are available to us? Should we incorporate? Should we use a trust? Our Lender indicated that these decisions are up to us. Can you give us some guidance?
Bill from South Portland
BOB’S ANSWER:
Bill:
This is a business transaction ( buying an apartment building ). Accordingly, if one of you should pass away during said ownership, I would think that the deceased person would have wanted his share to go to his family/ relatives by virtue of his Last Will and Testament. If you agree, the least expensive way of holding title would be as TENANTS IN COMMON not as joint tenants. If you are concerned about liability emanating from the operation of the apartment building, you may want to hold title in the name of a corporation or Limited Liability Company. This will provide you with some insulation from legal liability but will cost you for its formation ( $600 or so with filing fee ) and tax return annual preparation ( several hundred dollars ). A trust can also be used to hold title. I would have a tendency to prefer the corporation or Limited Liability Company OR, the less expensive TENANTS IN COMMON. In contrast, if you were buying the apartment building with your wife, you would likely take title as joint tenants with rights of survivorship. If you want further information, you can email me at boudlaw@verizon.net.
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