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Legal fees to transfer a single asset LLC being financed.

Discussion in 'General Yachting Discussion' started by Rusty Mayes, Feb 6, 2021.

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  1. Rusty Mayes, Feb 6, 2021
    #1
    Rusty Mayes

    Rusty Mayes Member

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    Do any of you folks that have purchased a yacht in a single asset LLC and used bank financing for the transaction recall and care to share roughly what the legal fees were to conduct the LLC transfer and filing?
    The CA LLC cost $1750 to initially set up and file, Just wondering if the transfer should be more complicated and cost significantly more to transact.
    Thanks
    Rusty Mayes
  2. olderboater, Feb 6, 2021
    #2
    olderboater

    olderboater Senior Member

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    Done poorly, very little. Done right, substantial.

    Here's the complication. I assume the bank if just going to finance the boat so a title company can for several hundred dollars check and insure them that there are no liens on the boat. However, that does not protect you in the purchase of the LLC. Just because the LLC owns the boat free and clear, doesn't mean the LLC doesn't have any debt or potential liabilities. To do a due diligence on the LLC is much more complex and costly than just doing so on the boat. This includes all tax compliance and any other activity and you can't assume because it had a "single asset" that it had no other activities or encumbrances. It's all a matter of how deep you want to go and how protected you want to be.

    At the very least you're going to need a good thorough lawyer experienced in such transfers and in protecting. Having an agreement with the prior owners saying they'll indemnify you is of some value but very little as it still means you'd have to sue them and prevail to collect.

    Many buy such LLC's as you're looking at all the time and are fine with it. I'm at the other extreme as I've bought hundreds of businesses by buying the assets only but don't like to buy LLC's or Corporations.
  3. Rusty Mayes, Feb 6, 2021
    #3
    Rusty Mayes

    Rusty Mayes Member

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    Great points, I am comfortable with this transaction as the LLC is only a couple of years old and owned and operated by a sitting superior court judge that is a fellow yacht club member. He was also a reputable local trust attorney that opted to use a maritime specialist law firm to set up the LLC. He is splitting the costs of the attorney fees for the transaction and was under the impression that it should be similar to the initial set up fees. I was hoping to either confirm that or get an idea as to what we can expect. The owner would have just called his original attorney to get a quote but the bank uses a different firm.
    Thanks
  4. Danvilletim, Feb 6, 2021
    #4
    Danvilletim

    Danvilletim Senior Member

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    I don’t think you will have much luck getting financing if the boat is in a LLC. I could be wrong but I would think the bank would want a personal guarantee. On a similar note, personal umbrella policy won’t cover a boat is its not in your name. But saving taxes may be worth trying.
  5. TahoeJohn, Feb 7, 2021
    #5
    TahoeJohn

    TahoeJohn Member

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    We recently went through the process of purchasing a sole asset LLC, though no financing was involved. A rough breakdown of legal costs:

    Communication time: $4k
    Title check, doc check: $1.25k
    MTIP doc, escrow, etc: $4k
    USCG documentation: $0.75k

    Total: $10k, discounted to just under $7k. Note that much of the communication time was me asking lots of questions, since this was the first time we had gone through this process.
  6. Rusty Mayes, Feb 7, 2021
    #6
    Rusty Mayes

    Rusty Mayes Member

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    Thanks Tahoe John, Sounds like the $2500 to $5000 that was estimated seems in line as the title and USCG fees are being handled by our loan broker and just the LLC transfer docs by the law firm. I wont need the education from the attorneys as I've owned LLCs in the past for aircraft partnerships. We never transferred one though. Thanks for the share.
    Cheers
  7. JadePanama, Feb 8, 2021
    #7
    JadePanama

    JadePanama Member

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    When we went to purchase our first yacht in an LLC 10k was the number that was given by several attorneys. I made the call to do my own due diligence, and once comfortable, just worked with the seller to simply log on to the State LLC site, transfer ownership, and had him sign a few papers that transferred ownership. Cost was pretty much nothing. Much depends on your comfort with the seller... in your case, its probably a pretty safe one from the sounds of it.
  8. Rusty Mayes, Feb 8, 2021
    #8
    Rusty Mayes

    Rusty Mayes Member

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    I think the lawyers charge what they can get away with and has little to do with billed hours. I was quoted 2500 to 5000 bucks. I spoke with the loan broker that is handling all correspondence with the lender, title, and legal offices. I asked how long it should take for the attorney to turn around the LLC docs to get an idea as to a time to close. She told me that it should not take more the 24 to 48 hours. That's not billed hours, that's elapsed time. They must just charge a flat rate for the service because all of the docs are boiler plate by now and they know just what the banks are looking for to be comfortable signing off on the loans.
    Colm likes this.