Act of Donation of real estate in Alabama

[wcb0020]

What is the name of your state (only U.S. law)? Three individuals from Louisiana recently purchased a condo in Gulf Shores Alabama that was financed. It was a personal purchase and not through a corporation to expidite closing. However, we can only get GL coverage up to $500,000. In order to protect each member can we form an LLC in Louisiana and perform an Act of Donation, donating the condo to the LLC and then leasing the condo to 3rd parties under the LLC? This will allow us to increase the GL coverage and better insulate each member from potential exposure.

 

[tranquility]

It won't be a "donation" but an investment. An LLC needs a business purpose. The owners of the property transfer the property to the LLC and get an increase in their capital account based on the value of the property when donated. (Probably, depending on exactly how things work.)

See a CPA for help on structuring this.