CSHV 1999 Harrison LLC v. County of Alameda

Facts:  A single-member LLC solely owned by a government agency purchases property as the vested owner. The county imposes a documentary transfer tax (DTT) on the LLC holding title to the property, which the LLC pays. The LLC seeks a refund for the DTT it paid.

Claim: The LLC claims it is exempt from paying the DTT since it is a pass-through entity solely owned by a government agency which is exempt from payment of DTTs.

Counterclaim: The county claims the LLC is not exempt from paying the DTT since it is a separate entity from the agency, and a single-member LLC may not disregard its separate nature when vested on title with ownership and full use of the property.

Holding: A California appeals court holds the LLC taking vested title to real estate is not exempt from the payment of the DTT and not entitled to a refund since, even when solely owned by a government agency, LLCs are entities separate from their members who may not disregard its separate nature concerning ownership or use of property. [CSHV 1999 Harrison, LLC v. County of Alameda (2023) 92 CA5th 117]

CSHV 1999 Harrison LLC v. County of Alameda

Editor’s note – To avoid the DTT, the agency needed to take vested title in the name of the agency. An agency is exempt from DTTs when title is vested in its name.

Related Article:

Vesting to shield assets from creditors

Related Recent Case Decisions:

May an individual in bankruptcy claim an automatic homestead exemption on real estate they occupy as their personal residence when title is vested in an LLC which is co-owned by the individual and their spouse?

May a county impose a documentary transfer tax on the transfer of a majority interest in a company owning property?

Is a partnership-owned LLC subject to a documentary transfer tax for a change in ownership of property it holds when more than 50% of the interests in the partnership are transferred?

Related Reading:

Legal Aspects of Real Estate — Chapter 26: Tenants in common as a vesting

Forming Real Estate Syndicates — Chapter 16: An overview of the LLC