LLC Must "qualify" To Do Business In Each State?
The following is posted when forming an LLC in California:
<<Filing Fees: An out-of-state LLC that will be conducting business in California must "qualify" to do business in California. This "qualifying" requires the LLC to pay filing fees to the California Secretary of State in addition to whatever filing fees were paid in the state of LLC Formation. >>
Is this also the case with other states? In other words, if I form a California LLC and I make an offer on 3 properties in 3 different states, do I need to pay fees and "qualify" in each state?
How do RE investors get around this?
Mark.
A corp or LLC in State A doesn't have to qualify to do business in all the states in which it might own RE.
This is very involved legal subject, called "doing business" and there have been thousands of court decisions on what is/is not DB.
e.g. a Corp that has its salespersons in every other state selling its products does NOT have to register in all the other 49...as the courts have pretty universally said that merely trying to sell its wares does not constitute DB.
And lots of decisions stating that State A LLC that owns and rents RE in several other states does NOT have to register in each of those other states.
John,
Thanks, that's good news. BUT... my concern is this: what if I buy a building and it needs work, so I hire contractors, etc. Does that cross the line? I'll talk with a lawyer more about this. Thanks!
You have to be very careful here. The filing requirements and definitions of doing business are defined by state law, so you have 50 different versions and requirements. It is usually not too difficult to research each state that you are looking at acquiring real estate in. Most states have the information on line, so when you are contemplating making an offer in another state simple log in and research the requirements.
[addsig]