Title companies generally represent the transaction and act as a combined agent for the title insurer, the buyer, the seller, and any other party involved in a real estate transaction, such as the mortgage lender.
The responsibilities of a title company are many, the most important of which are:
Property title analysis to issue a title insurance pledge. With this step, an investigation of the holding history is conducted and during this investigation, situations that require fixing prior to purchase may be discovered. If there is no solution, it is decided whether to issue title insurance
Carry out the closing of the transaction, preparing all legal documents; receive the necessary funds from the buyer or banking institution to make the necessary payments, acting as a fiduciary agent. This gives you transparency to the transaction.
Finally, issue a property title insurance to the buyer and the financial institution, guaranteeing a clean title from any title defect.
By taking these steps, the buyer is offered peace of mind that his investment is insured against any potential issues related to his ownership of his property.
Buying in your own name or in the name of a company?
One of the first decisions you must make when buying a property in the US is under what figure you will acquire it. A property can be purchased in a personal name or in the name of a company. The most used for these cases are: LLC, INC or Corp.
Investment property, almost without exception, must be acquired through the use of a corporation or other entity.
What are the advantages of buying through a company?
- Protects the owner from potential property-related lawsuits. That is, in case of lawsuit, they can only go against that property and not against other property or personal assets.
- Consolidate all the income and expenses attributable to this property within a single entity, this will help reduce the tax impact and during the eventual sale of the property.
- Provides flexibility when planning tax payments, in terms of transferring property interests to family members and others.
- Avoid or reduce inheritance taxes, therefore, when the owner of the company dies, the legal entity never dies, thus reducing the amount of inheritance tax.
Should I open a business for every property I buy?
Forming a company for each property is really the best protection you can get. In this way the investor limits the legal responsibility to each one of the properties.
If several properties are under the same entity, the responsibility of one of them could expose the other properties. However, due to the costs of starting, managing and maintaining these companies, it is common for investors to maintain multiple properties under the same company.
Estimated costs of starting a company to buy a property
Approximate opening cost between $ 500- $ 900
Annual renewal cost ranges from $ 200- $ 400 approximately
Accountant fees for administration and annual tax return (before May 1) depend on the service and structure requested by each client, but ranges from $ 500- $ 1,000
What does it take to open a company?
- Register name
- Mailing address in the United States
- Names of the directors and their respective identifications.
- Prepare articles of incorporation of the company (work of the accountant)
- Prepare operation agreement (accountant’s job)
How long does the opening process take?
The process takes between 5-15 business days.
I bought in a personal name, can I transfer it to a company?
It is important that you plan for this before making the transaction; However, if you have already purchased in a personal name, although it is possible to transfer ownership, it is important that you consult with an accountant and / or lawyer to analyze your specific case and be able to determine the possible legal and financial implications. Among them it is important to determine:
If FIRPTA applies (foreign investors)
Transfer costs
If it is taken as sale
LEGAL NOTE: These provisions are complicated and require the experience of a public accountant and / or real estate attorney to assess the potential legal and tax implications. At no time should this information be taken as advice.
