By Lane V. Erickson, Idaho Business Attorney
Businesses are started by many different people for many different reasons. For some, the main purpose of their business is to own and handle real estate, such as commercial or residential rentals. For others, owning real estate in a business is just an appendage to what the business actually does, such as manufacturing or retail sales. Regardless of the reason a business may own real estate, many businesses find themselves in a position where they either are ready to or need to sell some or all of its real estate.
At the Racine law office, we use a team approach when it comes to assisting our business clients meet all of their legal needs including selling real estate. Our team of Idaho business lawyers includes partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley. Each of the attorneys on our team have earned the highest ratings possible from all legal ranking services including Martindale Hubbell, justia, and AVVO. Our attorneys are knowledgeable and experienced in assisting clients meet their small business needs, including selling real estate.
While it may seem straightforward, selling real estate that is owned by a business may be anything but simple. Usually, the process is different than when you are selling a home. The purpose of this article is to give you some ideas of the things that you should be considering if you are going to sell real property from your business. The things that you should be considering are: who the seller really is, the documents that you may need in order to complete the sales transaction, and what to expect at closing.
This article is not designed to be exhaustive. Rather, this is just a starting place for you to make a list of the things that you should be considering if you are going to be selling real estate from your business.
Who the Seller Really isThe first thing that you should consider is who the seller of the property really is. This may seem like a silly thing, but we often find when our clients come to us wanting to sell real estate that the real estate may not be owned by the person or the entity our clients thought it was owned by.
The easiest and most sure way to know who the owner of the real estate is will be to get a copy of the actual deed. This would be either a written warranty deed or a quitclaim deed. Copies of these deeds can be obtained from the Counter Recorder’s Office of the county where the property is located. All you need is an address of the property and the deed can be provided.
In order for a deed to be a proper conveyance of title, the name of the owner is required to be listed on the deed together with the owner’s address. For this reason, the deed will show who the owner of the property actually is.
It’s important to know who the owner actually is, because if the property is going to be sold, it will be the actual owner of the property who is listed on the deed as the seller transferring title to the new purchaser. In other words, the true current owner of the property must be listed on the deed conveying title to the new owner.
Again, there have been many times that our clients have come to us to help them sell real estate that they believed was owned by their business, only to find out that they owned the property individually. Alternatively, we’ve had some clients present deeds to us showing that their business was only a partial owner of the real property and as a result they did not have the ability to sell or transfer title to that real estate without all the other owners also signing the deed to sell the property.
The Documents You NeedThe documents that you need to complete a real estate transaction aren’t complicated but are not necessarily easy either. These documents usually include a purchase and sale agreement, and the deed transferring title. These documents could also include a promissory note, a mortgage or deed of trust, current lease agreements, as well as property tax statements, and closing statements,
The different types of documents listed above are that are needed in your transaction are determined by the type of transaction you are actually doing. If you are selling the real estate outright to someone else, then you usually only need the purchase and sale agreement and the deed. However, if you are selling the property to someone who will be making monthly payments to you, you may also need to use the promissory note and the mortgage or deed of trust documents.
Using a qualified business or real estate attorney to help you determine the types of documents you need, and to prepare those documents for you, is an important part of your real estate transaction. Your lawyer will be looking out for your interests and will be making sure that the documents are prepared and completed properly to accomplish what you want.
What to Expect at ClosingA closing is simply the date and time where the parties go in to do a final review of the documents and then sign the documents that complete the transaction. The closing is not the time that you should be reading any documents for the first time. Rather, if you are selling real estate you should be reviewing the closing documents well in advance of the actual closing itself.
At closing, you will be asked to sign the final documents that will be involved in your transaction. If the property is being sold by your business, this would also include you providing proof of your ownership interest in the business and providing a corporate resolution from the other owners of the business showing that everyone agrees that this transaction is proper. Again, a qualified real estate or business attorney can help you be prepared for and properly complete all of the closing documents.
We have assisted numerous clients in selling property that they owned in their business. We are confident that we can answer your questions and help you through this process as well. Please call us for a free consultation to review your transaction so that we can explain how we can help you.
Enlist an Idaho Business Attorney to Help YouOur team of Idaho business lawyers can help you with any of your business structure or operation needs. Whether you are seeking to create a new business or review a current business, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a free consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.