USA - NEW JERSEY Law and Practice Contributed by: Steven Fleissig, David Freylikhman, Cory Mitchell Gray and David Jensen, Greenberg Traurig LLP
4.7 Enforcement of Restrictions on Development and Designated Use Municipalities typically employ code enforce - ment officials who respond to complaints, moni - tor ongoing construction, and conduct routine town inspections to ensure that unauthorised and/or unlawful developments are identified and appropriate municipal or court action is taken. State and county agencies also employ engi - neers and inspectors to oversee construction and development within their jurisdictions. In the case of construction (as distinct from unlawful use), a “stop work” order is usually issued by a code enforcement officer with a violation of such order resulting in fines, which can be significant. In the case of an unlawful use, a notice of viola - tion would be served upon the property owner; again, violations of the permitted uses of a given property would typically result in fines. Each day of non-compliance with the applicable uses in a zone, or with construction that is not permit - ted, constitutes a separate violation. In addition, municipalities will typically not issue permits until it has first been ascertained that the construc - tion has been authorised and that the use is a permitted one. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets New Jersey recognises various business enti - ties that are available to owners of real estate, including limited liability companies, corpora - tions, and partnerships. The most common enti - ty is the limited liability company, which affords the most flexibility and pass-through taxation, as well as fewer formalities than corporations.
5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Corporation A corporation in New Jersey, as elsewhere, pro - vides a separation between the shareholders, directors, and officers. The shareholders are the owners of the corporation and they elect the board of directors. The directors manage the business trajectory and activities of the corpora - tion. The directors appoint officers who manage the day-to-day business and affairs. The main benefit of a corporation is that shareholders have no personal liability for the corporation except for certain specific instances such as a breach of fiduciary duty or a breach of the duty of loyalty. Limited Liability Company A New Jersey limited liability company (an LLC) has many of the same benefits of a corporation but is preferred for its flexibility of management while affording liability protection to its mem - bers. In addition, unlike corporations, LLCs are not taxed on the entity level but, rather, tax liability passes through to each of the members individually. For that reason, the LLC is the pre - ferred form for structuring the acquisition of real property in New Jersey. Partnerships Partnerships have become far less common in recent years, especially with the increased pop - ularity and ease of LLCs. Partnerships in New Jersey are more likely to be limited partnerships which combine a limited partner and a general partner. The limited partner is insulated from unlimited liability, but does not participate in the management or operation of the business. In this structure, the limited partner is only liable for its investment; accordingly, this form was primar - ily beneficial for a limited partner that sought to avoid unlimited liability and a general partner
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