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

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


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. 510-208-5500. This answer does not create an attorney-client relationship. It is not legal advice, because it is only of a general nature. Please contact a lawyer qualified in your jurisdiction to discuss your situation in confidence, using your factual details. Avvo answers are only general legal responses. Item 9 of's Terms and Conditions are incorporated in this disclaimer as though it were printed here.

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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 analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.

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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 purposes only. It neither creates an attorney-client relationship nor provides legal guidance or advice. The answer is based on the limited information provided and the answer might be different had additional information been provided. You should consult an attorney.

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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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