The world of commercial real estate transactions financing is fraught with legal pitfalls, a fact that has been duly reported time and time again since the end of the “boom” in late 2007. Lower valuations, impinged cash flow, government action, and general economic distress have, and will continue, to affect commercial real estate in San Francisco, and throughout the country, generating issues for attorneys to address. In my next three posts I will discuss three different legal issues with which your commercial real estate attorney in San Francisco should be well versed: LLCs, construction litigation, and commercial leases.
In recent years, the LLC has become an increasingly popular legal entity for San Francisco commercial real estate ventures, and clients with LLCs have become increasingly savvy along the way. The LLC’s attractiveness is based on its flexibility, tax advantages, and potential for estate planning. However, some very complex scenarios can arise from LLC ownership and management. Specifically, LLCs uniquely impacts areas including, but not limited to:
- The needs and fiduciary responsibilities of minority shareholders, which can often be misunderstood or ignored.
- Legislative changes and existing financial trends can change the strategies by which LLC’s can be used as an estate planning tool.
- Self-employment tax planning and member retirement issues can greatly impact tax preparation and litigation.
- Changes to securities laws can rapidly change an LLC client’s compliance status.
- The valuation of LLC can become a sticking point during estate planning and tax-planning.