Property can be classified into several types, each with its characteristics and legal implications. The most common types of property include real property, personal property, intellectual property, and community property.
- Real property refers to land and everything permanently attached to it, such as buildings and fixtures. It is considered immovable and subject to various laws governing ownership rights.
- Personal property includes movable items such as cars, furniture, and jewellery. Unlike real property, personal property can be easily transferred or sold without much legal intervention.
- Intellectual property comprises intangible assets such as patents, trademarks, copyrights, and trade secrets. These properties protect the owner’s exclusive right to use or sell their creations.
- Community property is a type of marital asset that is jointly owned by both spouses in some states. This type of ownership applies to all assets acquired during the marriage.
Before diving into the process of transferring property to a company, it’s crucial to understand the different types of business entities and their implications. There are three primary types of business entities in Nigeria when considering a property transfer.
Business Name/Enterprise
This is a form of business entity, where the owner(s) and the business are considered the same legal entity. It can either be in the form of a Sole proprietorship or Partnership. In the former, an individual owns and operates the business, while in the latter, two or more people own and operate the business.
This type of company is easy to set up and manage but has unlimited liability for the owner(s) and no legal personality. In this case, transferring property to the business is not advisable.
Partnership
The partnership involves two or more individuals who come together to start a business. Partnerships can be general or limited, with each partner having different levels of liability. CAMA 2020 introduced a more formalised system of partnership. This is the LP and the LLP. It is a hybrid business entity that combines the characteristics of a corporation and a business name.
It provides limited liability protection to their owners while allowing them to retain flexibility in management. Transferring property to this kind of partnership is allowed under the law since it has a distinct legal personality from its owners
Corporation
Corporations are separate legal entities from their owners. It can be either a private company or a public company. It can further either be limited by shares, limited by guarantee or unlimited. Transferring property to a corporation which has a distinct legal personality makes the corporation the rightful owner of the property until the transfer is reversed.
It involves specific steps, such as putting the property in the name of the business, creating a written record that shows ownership of the property was transferred to the company, and visiting relevant registries and government offices to record and register the deed of transfer. It’s crucial to consult with an attorney or an accountant with experience handling corporate asset transfers to navigate the legal and tax implications and ensure a smooth transfer.
In today’s world, owning property is a crucial aspect of running a successful business. Owning property provides businesses with stability and control over their operations. One of the main reasons for transferring property to a company is to protect personal assets from potential liabilities that may arise from business activities. By transferring ownership to the company, individuals can limit their personal liability and ensure that their personal assets are not at risk.
Another benefit of transferring property to a company is that it allows for easier management and control over assets. The company can manage and utilize these assets more efficiently than an individual owner could. Watch out for our next article on the benefits of transferring your property to your company.