Legal Question in Business Law in Oregon

I am a resident of Oregon.

I have a business in Oregon.

I am considering buying a residential property in Arizona as a vacation home and an investment property. My family would use the home, and I would use a leasing agency to handle the property and rent it as a short-term executive rental.

I plan to form an LLC for the property, to provide me the liability protection, separating it from my personal assets.

The property would have an income from the rentals.

My question is: am I obligated to form the LLC in Arizona, or can the LLC be formed in Oregon?

Or do I have the option of forming the LLC in either state? If so, then I could take under consideration any tax/financial benefits one state may have over the other.

Is is necessary to have the LLC registered prior to the purchase of the home?

Can the mortgage be in my name, or does the mortgage need to be in the name of the LLC?

If it needs to be in the name of the LLC, does it limit the type of mortgage I can hold, or restrict what the bank can offer? Do I need to notify the bank that the home will be an asset of my LLC? Can the mortgage be in my name, with a DBA of the LLC - does that still afford me the liability protection?

I want to ensure that if I do this, I do this right, and protect my personal assets.

Thank you!!


Asked on 1/09/10, 12:22 pm

1 Answer from Attorneys
Susan Burns Law Office of Susan Ford Burns

There are no yes/no answers for most of your questions here. This is the type of question set that really needs a personal consultation with an attorney.The answers will vary based on your specific circumstances. You may even find that an LLC is not the right thing to do in your circumstances.

As to the location of the LLC, it can be formed in either state, but must be registered in the state where it owns real property. (Which means that if it is formed in Oregon, it will also have to register in Arizona.

In most cases, the mortgage will need to be in the name of the "owner" of the property because the mortgage will have a "due on sale" clause that prohibits the transfer of the property from one owner to another (this would include a transfer from you to the LLC or vice versa),

Read more
Answered on 1/14/10, 12:56 pm


Related Questions & Answers

More Business Law questions and answers in Oregon