A Locked-In Transfer Agreement (LITA) is a legally binding document that establishes an agreement between a transferor and a transferee. It is used when the transferor wants to transfer assets, such as shares or real estate, to the transferee while maintaining control over them. The agreement sets out the terms of the transfer, including how long the assets are locked in and the conditions under which they can be sold.
The LITA form is a key component of the agreement. It is a template that outlines the terms of the agreement and provides a structure for the transfer process. The form usually includes the following sections:
1. Introduction – This section provides an overview of the agreement and sets out the parties involved.
2. Description of Assets – This section details the assets being transferred, including their value and any restrictions on their use.
3. Transfer Restrictions – This section sets out the terms under which the assets can be transferred or sold. It may include restrictions on the length of time the assets must be held, conditions under which they can be sold, and penalties for violating the terms of the agreement.
4. Payment Terms – This section details how the transferee will pay for the assets, including any payment schedules or payment methods.
5. Termination – This section outlines the conditions under which the agreement can be terminated, including breach of contract or expiration of the lock-in period.
6. Governing Law – This section specifies the laws that govern the agreement, including the jurisdiction in which any disputes will be resolved.
LITA forms are typically used by business owners who want to transfer ownership of their company while maintaining control over its operations. They may also be used by investors who want to transfer assets to family members or business partners while ensuring that the assets are not sold without their consent.
In summary, a Locked-In Transfer Agreement is a legally binding document that establishes an agreement between a transferor and a transferee. The LITA form is a template used to outline the terms and conditions of the agreement, including the length of time the assets are locked in and the conditions under which they can be sold. This type of agreement is commonly used by business owners and investors to transfer assets while maintaining control over their use.