I've done business this way for many years and have had no problems, until a former tenant decided to sue me for her deposit. It made me realize that if something more serious were to happen, I could possibly be putting my own personal assets and family at risk. Should I form an LLC or just a fictitious name? What are the benefits of a fictitious name? Finally, if I do an LLC, do I just do Quit Claim Deeds and file them with the Clerk of Court? Oh, and I have insurance on every property.
You should consult an experienced lawyer in your area who is experienced in asset protection. In any ownership scheme, you should protect yourself by maintaining adequate liability insurance for the property. An LLC, an LLP, or a land trust can provide you with protection for creditors and potential creditors. A fictitious name will provide you no protection. Your lawyer can help you set up the best ownership regimen to protect our assets.
Disclaimer: This answer is provided for informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Actual legal advice can only be provided after completing a comprehensive consultation in which all of the relevant facts are discussed and reviewed.
If you decide to go this route, ALL the rental units should be in their OWN LLCs, otherwise it sort of defeats the purpose. Before doing anything, contact your insurance company and find out if they will write insurance on the property if owned by an LLC - some will not. Then, hire an asset protection attorney to assure that everything is properly taken care of and you assets are sufficiently protected.
My answer is of a general nature and should not be construed to be legal advice nor creating an attorney-client relationship. Carol Johnson Law Firm, P.A. practices in the area of Wills, Trusts, and Estates, Disability - with a particular focus on providing Special Needs Trusts and Planning for the care of disabled children and adults.
Generally speaking it would be a good idea to structure your holdings so that each property is insulated from the liabilities arising from any of the other properties. Simply putting all of the properties into one LLC might shield your personal assets, but would still leave all of the properties at risk for a liability arising from one property.
This must be done in consultation with an attorney, however; it can be complicated, with many moving parts, and is not suitable as a DIY project.
My answer does not constitute legal advice and may not be relied upon by anyone for any purpose and does not constitute an attorney/client relationship or an offer to form such a relationship. This disclaimer is intended to be fully compliant with the requirements of Treasury Department Circular 230 and the terms thereof are fully incorporated by reference.
You transfers and arrangements would go better with the assistance of counsel. AS you will note, I provide free initial consultation and would be happy to discuss this matter with you by phone
I provide free initial consultation extended to all clients either in office or by phone. We do not have an attorney-client relationship unless we enter into a written, formal letter of instruction to represent; accordingly, I am not your lawyer. The statements I make do not constitute legal advice. Any statements I make are based upon the limited facts you have presented, and under the premise that you will consult with a local attorney. This is not an attempt to solicit business. This disclaimer is in addition to any disclaimers that this website has made. I am admitted to practice in Florida, Oklahoma, and Texas, and to the Bar of U. S. District Courts. Accordingly, my responses reflect the law of those states. I practice extensively in U. S. District and Bankruptcy Courts. Any advice given here is deemed to be within the parameters of the rules of professional responsibility and codes of ethics as promulgated by The Florida Bar and The Supreme Court of Florida, The State Bar of Texas and the Texas Supreme Court and the Oklahoma Bar Association and the Oklahoma Supreme Court.
With that many properties, asset protection and personal liability mitigation should be two of your top priorities. This is not something you should attempt on your own, as you don't want to find out after the fact that the LLCs or LLP were not structured properly. I would recommend you consult an experienced real estate attorney.
The main objective in any ownership situation is protecting yourself from personal liability. There are several ways to accomplish this. First, you should protect yourself by maintaining adequate liability insurance for the property. Second, you can set up An LLC, an LLP, or a land trust to protect you from personal liability against potential claims from creditors and/or judgment holders. I personally recommend doing both.
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