Transfer of property from an LLC that filed Ch. 7

[jadinnien]

California

I have a question regarding the transfer of property from an LLC to another organization (in this case, the nonprofit I work at). One of our board members had an LLC that filed chapter 7 bankruptcy several years ago. This LLC owned several vacant lots in a California city, each of which owes approximately $50,000 in property taxes per lot. We are thinking of purchasing these lots from him.
What would they need to do to become in good standing and so be able to transfer these lots to us beyond paying the property taxes (or could we do that after?) I’m thinking they need to file taxes for a certain amount of years and apply for ????

 

[adjusterjack]

What would they need to do to become in good standing and so be able to transfer these lots to us beyond paying the property taxes (or could we do that after?) I’m thinking they need to file taxes for a certain amount of years and apply for ????

Assuming for the moment that the bankruptcy has nothing to do with the properties or the back taxes, you can buy the properties subject to the taxes and put enough cash in escrow to pay the back taxes out of escrow. Otherwise, the tax lien will follow the property which could be foreclosed at any time.

You'll have to make sure that there are no tax liens that have been sold to somebody else. If there are, you'll have to pay them off, too, to avoid foreclosure by third parties.

 

[latigo]

You are thinking of purchasing "those lots from him"? A former member of a bankrupt and now defunct LLC?

Please explain how "him" is the recorded owner of land once held in the name of the entity?

Some questions:

1. Did the LLC declare these lots in Schedule A of its petition in bankruptcy? Or were the lots somehow moved out of the LLC prior to its filing? And if so, to whom? And when with respect to the filing?

2. If listed on Schedule A, how were they treated by the trustee?

3. If the lots were abandoned, then to whom or what and how was title transferred out of the LLC?

4. What is the status of the recorded title to the lots at the present time?

5. What is the current appraised value of the lots? If not substantially greater than the tax liens, do you believe it appropriate for a "non-profit organization" to assume those liens? And if greater in value, why has the recorded owner allowed them to accumulate to five figures?

Also, an insider transaction between the entity and a board member who stands in a fiduciary position is likely to invite a good deal of unwanted scrutiny.

You people need to be talking to the corporate attorney.