If an LLC or corp is formed for the sole purpose of buying real estate, and then the LLC/corp dissolves without transferring title on the property, what happens to the property?
For example, a house is deeded to ACME, Inc. and then ACME, Inc. dissolves. If the title remains in the name of ACME, Inc. after the company no longer exists, who owns the property?
As I understand the matter under California law, a dissolved LLC nonetheless continues in existence for the limited purpose of winding up its affairs and distributing to its members in final liquidation any property remaining after the LLC's other obligations have been taken care of.
See Cal. Corp. Code sec. 17707.06(a); to wit: "A limited liability company that is dissolved nevertheless continues to exist for the purpose of winding up its affairs, prosecuting and defending actions by or against it in order to collect and discharge obligations, disposing of and conveying its property, and collecting and dividing its assets. A limited liability company shall not continue business except so far as necessary for its winding up."
There is, of course, a cloud on title because the LLC is, generally speaking, no longer in good standing. If it's been a while since the LLC stopped operating, it would probably be a wise idea for the interested parties to petition the court with jurisdiction over the matter to make sure that clear title can be passed.
If you're in this situation I highly recommend you speak with a local real estate attorney who can confirm or correct my understanding and properly advise you based on all the facts.
My answer does not constitute legal advice and may not be relied upon by anyone for any purpose and does not constitute an attorney/client relationship or an offer to form such a relationship. This disclaimer is intended to be fully compliant with the requirements of Treasury Department Circular 230 and the terms thereof are fully incorporated by reference.
No one. There is a cloud on title. You may need to reform Acme to correct this.
I am changing the category to corporate.
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