Can an Illinois LLC be formed with members from both Illinois and another state for the purpose of owning real estate located in New Jersey, or does the LLC have to formed in New Jersey where the property is located?
– Amy, Illinois
You are asking two questions, really.
1. Can an out of state LLC own property in state?
2. If an Illinois LLC can own property in NJ, does it have to jump through any additional regulatory hoops, such as registering as a foreign corporation in NJ?
The answer to 1 is yes. An Illinois LLC can own property in NJ.
The answer to 2 is whether your Illinois LLC must register as a foreign corporation in NJ because it is “transacting business”.
Here is what NJ law says about what constitutes “transacting business”:
- (2) Without excluding other activities which may not constitute transacting business in this State, a foreign corporation shall not be considered to be transacting business in this State, for the purposes of this act, by reason of carrying on in this State any one or more of the following activities
- (a) maintaining, defending or otherwise participating in any action or proceeding, whether judicial, administrative, arbitrative or otherwise, or effecting the settlement thereof or the settlement of claims or disputes;
- (b) holding meetings of its directors or shareholders;
- (c) maintaining bank accounts or borrowing money, with or without security, even if such borrowings are repeated and continuous transactions and even if such security has a situs in this State;
- (d) maintaining offices or agencies for the transfer, exchange and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities.
NJ law also has this interesting statute that might apply in your situation:
- 14A:13-1. Holding and conveying real estate
- A corporation organized under laws other than the laws of this State, whether or not constituting a foreign corporation as defined in this act, shall have the same powers with respect to real property located in this State, or any interest therein, as a domestic corporation.
Seek the advice of a NJ attorney to determine if your Illinois LLC must register as a foreign corporation in NJ.