I am a real estate agent starting a property management company with a real estate broker. What type of entity should we form?

Asked over 1 year ago - San Francisco, CA

Should we form an LLC ? Are there other options ? The broker I am working with has a sole proprietorship set up for other real estate work he does . Could we operate the property management company under his sole proprietorship as a " Doing Business As " ( DBA ) ?

Attorney answers (4)

  1. Andrew Kevin Jacobson

    Pro

    Contributor Level 16

    6

    Lawyers agree

    Answered . First, it will depend exactly on what you are doing. Real estate brokers, lawyers, doctors, dentists, and even barbers need to be licensed to practice their profession, and that means that under California law, they cannot be limited liability companies ("LLCs"). However, if the business stays only in property management, then an LLC is possible, although an "S" corporation or even a "C" corporation may fit the bill, as well.
    The best thing to do is to discuss this with an experience attorney, so that the goals of the investors is met.

    www.bayoaklaw.com. 510-208-5500. This answer does not create an attorney-client relationship. It is not legal... more
  2. Michael Charles Doland

    Contributor Level 20

    4

    Lawyers agree

    Answered . Based on your facts, my inclination is that a Sub S corporation would be the way to go, preferable to an LLC which is not permitted or a contractual relationship with a sole proprietor. You should have a contract in addition to your bylaws and that contract should address employment, management and "buy-sell" provisions.

    The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may... more
  3. Michael T Millar

    Pro

    Contributor Level 19

    3

    Lawyers agree

    Answered . I agree with my colleagues. An S Corporation is likely preferable. You should have a local business attorney draft a shareholder agreement for you.

    If this answer was helpful, please mark it as helpful or as a best answer. This answer is for general education... more
  4. Brian Leigh DeWitt

    Contributor Level 9

    Answered . The California Department of Real Estate will not issue a broker's license to a LLC, so you would need to form a corporation. For liability protection, your property management business should have an entity as the contracting party on the management contracts. A licensed individual broker must serve as the "designated broker or record" for the corporate broker.

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