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How to transfer a property from a partnership to a limited company?
The partnership and the company are separate legal entities and should be represented by two separate, independent solicitors. The process will follow the same route as the standard conveyancing process for a sale and purchase in an arms length transaction. If the company is getting a a mortgage then the mortgage lender will likely need the directors to give a mortgage guarantee and obtain independent legal advice (separate to the sale and the purchase). The time frame with no mortgages involved can take a matter of weeks, however if the company needs to obtain a mortgage then the conveyancing solicitor will need to do more detailed investigations into the legal title and the special requirements of the mortgage lender thus adding more time onto the transaction.
We have separate solicitors who can handle the sale, purchase and the independent legal advice. Calls us today to discuss on 0207 112 5388 or click here to get a quote.
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What does the new company need to do?
Once, or even before, you transfer the property from the partnership to the company, you should think about how the property is going to be run by the company and ways the shareholders here are a list of things the company needs to do:
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Shareholders Agreement- the principles behind a shareholders agreement are similar to that of a partnership agreement. The shareholders put in writing their intentions for the company, the responsibilities, the ownership structure and the process to sell or buy shares. For example, without a shareholders agreement the shareholders can look to sell their shares to anyone they want to. A shareholders agreement creates a control to protect the interests of the shareholders.
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Update Buy to Let Agreement- if there is a tenant who is going to remain in the property then the tenancy agreement needs to be updated and the deposit transferred into a 'Deposit Protection Scheme' in the name of the company. You can read more on this here - Buying a property with a sitting tenant.
Do you need help transferring property to a company?
Here are a list of services we can offer:
- Specialist conveyancing solicitor for sale and purchase
- Drafting shareholders agreement
- Direct Guarantee Legal Advice
Links and Sources:
HMRC - Special provisions relating to partnerships: Stamp Duty implications of Schedule 15 - Example