As you can see in the below article, the Sheraton Suites Hotel in Downtown San Diego has sold for $50,000,000.00. A deeper look at the transaction allows one to see that the buyer was an affiliate of Marriot International Inc. Marriot Ownership Resorts Inc., a Maryland entity. This brings up the question, whether one is it better off purchasing a piece of commercial real estate through an Incorporation or an LLC? Also, why was an affiliate used? Why wasn’t the property purchased in Marriot Ownership Resort Inc’s own name? Finally, why was an entity in Maryland used as oppose to a California, Delaware, or Nevada entity?

There could be many reasons for the above decisions. Without knowing more intimate information about Marriot Inc.’s books we cannot provide an accurate legal opinion. However, it is very interesting to see what key legal decisions are made when making real estate purchases. Decisions such as whether to have an entity in the first place, the type of entity it should be, the state the entity is incorporated in, and what name to put the property in. We haven’t even gotten into the documents surrounding the sale which I am sure were extensive.

Ask yourself, do you go through a similar thought process when purchasing a piece of property? If not, why not?

Regarding the Seller, the Sheraton was sold by Noiro West LLC of Hove Sound Florida. Assuming the entity was formed in Florida one would look at why the Seller chose Florida and an LLC where the buyer chose Maryland and an Incorporation.

While these decisions seem inconsequential they can make a real bottom line difference if the property ever goes to litigation, shareholder dispute, or the like. LOKK Legal assists its clients with making such decisions and protecting them around the surrounding purchase and sale.