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Legal Advisory

What is a Title Company?

Title companies generally represent the transaction and act as combined agents 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, with the most important being: Title Analysis: Conducting a title search to issue a title insurance commitment. This involves investigating the property's ownership history, during which issues requiring resolution before purchase may be discovered. If unresolved, a decision is made on whether to issue title insurance. Closing the Transaction: Preparing all legal documents and receiving the necessary funds from the buyer or financial institution to make the required payments, acting as a fiduciary agent. This provides transparency to the transaction. Issuing Title Insurance: Finally, issuing a title insurance policy to the buyer and the financial institution, guaranteeing a title free from any defects. By taking these steps, the buyer is assured that their investment is protected against any potential issues related to the property's ownership.

What is needed to open a company?

Register the name
U.S. mailing address.
Names of the directors and their respective identifications.
Prepare the company’s articles of incorporation (accountant's job).
Prepare the operating agreement (accountant's job).

How long does the opening process take?

Buying in Your Own Name or in a Company's Name?

One of the first decisions you must make when purchasing property in the U.S. is under what entity you will buy it. A property can be purchased in an individual's name or in a company's name. The most commonly used entities for these cases are LLC, INC, or Corp. Investment properties, almost without exception, should be acquired through a corporation or another entity. What are the advantages of buying through a company?

Protection: It protects the owner from potential lawsuits related to the property. In case of a lawsuit, only that property can be targeted, not other personal assets.
Consolidation of Income and Expenses: It consolidates all income and expenses attributable to the property within a single entity, helping to reduce the tax impact and facilitating the eventual sale of the property.
Tax Planning Flexibility: Provides flexibility in tax planning, in terms of transferring property interests to family members and others.
Inheritance Tax Reduction: It avoids or reduces estate taxes. When the owner of the company passes away, the legal entity does not die, thus reducing the amount of inheritance tax.

Should I open a company for each property I purchase? Forming a company for each property is the highest protection you can obtain. This way, the investor limits legal liability to each individual property. If multiple properties are under one entity, the liability of one could expose the others. However, due to the costs of opening, administering, and maintaining these companies, it is common for investors to keep multiple properties under a single company. Estimated Costs of Opening a Company to Purchase Real Estate

I bought in my personal name, can I transfer it to a company?

It is important to plan this before completing the transaction; however, if you have already purchased in your personal name, it is still possible to transfer the property. It is crucial to consult with an accountant and/or lawyer to analyze your specific case and determine the possible legal and financial implications. Among these, it is important to determine:

LEGAL NOTE: These provisions are complex and require the expertise of a certified public accountant and/or real estate lawyer to evaluate the potential legal and tax implications. This information should not be taken as legal advice.