Ownership by business entities and syndicates

Who owns the building?

Business ownership separates the property from the people investing in it. A corporation owns its real estate; shareholders own shares, not individual pieces of the corporate land. Similarly, an LLC owns its property while members own membership interests. Check three separate questions: who holds title, who may act for that owner, and who bears liability.

Comparing the structures

A sole proprietorship has one individual owner and no separate entity liability shield. A general partnership brings together co-owners of a business for profit. Partners may bind the partnership in its ordinary business, and general partners face personal liability for partnership obligations. A partner's economic interest is not a separately deeded portion of each partnership asset.

A limited partnership has at least one general partner and at least one limited partner. The general partner manages and has general-partner liability; limited partners ordinarily risk their investment without personal liability merely because they are limited partners. Do not assume that participation in management by itself destroys a California limited partner's protection.

A corporation is a separate legal entity. Shareholders elect directors, and authorized officers carry out corporate business. An LLC combines a separate entity and limited liability for members with flexible management: members may manage, or the operating agreement may provide for managers. A membership percentage alone does not establish authority to sign a deed. Limited liability does not erase liability for one's own wrongdoing or a personal guarantee.

Pooling investments

A real estate syndicate pools investors' money and often combines it with a sponsor's expertise to acquire or develop property. Syndication describes an investment arrangement, not a single legal form: the vehicle might be an LLC or limited partnership. A joint venture commonly focuses on a particular project. A real estate investment trust, or REIT, is a qualifying real estate investment vehicle through which investors acquire shares; those shares are not deeds to particular apartments. Some REIT shares trade publicly, while others do not. Passive investment interests may be securities, so forming a property-owning entity does not eliminate securities-law questions.

For a sale, verify the record owner and the representative's authority through the applicable governing documents and authorizations. An investor selling an ownership interest is not necessarily conveying the underlying real estate. Specific authority, tax treatment, and liability outcomes depend on the arrangement; obtain appropriate professional review.

California: ownership and brokerage are separate

Owning real estate through an entity is different from conducting licensed brokerage. California Business and Professions Code section 10157 provides that a real estate license authorizes the person to whom it is issued, not another person. A shareholder's individual license is not the corporation's license. Section 10153 addresses examination qualifications for officers or agents through whom a corporate broker applicant proposes to act.

A business name also is not an ownership structure. Under California section 10159.7, a qualifying team name identifies licensees working together and must not imply an entity independent of their responsible broker. A brand does not itself prove title, signing authority, or limited liability.