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Judi Moresi, Home Buyer in Detroit, MI

If I am sued, how much can I be sued for if my rental property is bought thru a LLC?

Asked by Judi Moresi, Detroit, MI Tue Mar 9, 2010

I intend setting up a LLC & then buying an investment property thru this. If I am sued at some stage for a matter relating to the property, is the total amount I can be sued for, only to the value of my investments held in th LLC & unable to get to any of my personal wealth?
Judi

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Answers

4
Your best option is a real estate attorney to make sure everything is handled correctly.

Reach out to us at

Morgenstern DeVoesick PLLC

585-672-5500 or contact@morgdevo.com
0 votes Thank Flag Link Thu May 30, 2013
Disclaimer: I'm not a lawyer, so this isn't legal advice. For legal advice, please consult a lawyer.

The LLC isn't an absolute shield. Actually, far from it. It helps, but even then you have to be sure that you operate it properly--keeping finances in it separate from your personal finances, and so on. And make sure it's a multi-partner LLC, if you go that route, not a single-partner LLC.

Second, it'll be virtually impossible to buy an investment property through your LLC. You can buy as yourself and then transfer ownership to the LLC. That can help some, since the property will be owned by an LLC. However, the mortgage will be in your own name. Even if you were able to buy through an LLC, the lender would demand that you personally guarantee the mortgage.

Set up other levels of protection as well. For example, consider buying an umbrella liability insurance policy. A $2 million policy will cost you maybe $350 a year.

Also, look into using a land trust as the ownership device. Some people will erroneously tell you that a land trust is best used just to hide the property owner's identity. Not true. Properly constructed, it can be far more effective at shielding you against liens, suits, and judgments than an LLC. For more information, go to http://www.landtrust.net

So, see a good real estate lawyer. Especially, learn about the limitations of an LLC. It's good, but it absolutely will not make you judgment proof.

Hope that helps.
0 votes Thank Flag Link Tue Mar 9, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
What a great question Judi! The best professional to answer it is a real estate attorney. They will be able to advise you on the pros & cons of getting an LLC as well as establish it should you choose. A couple of attorneys that my client love are:
George Schell, Jr.
585-377-2682 x 11 or georgejr.@schelllaw.com

Joe DeMaria
585-232-4910 or DeMarialaw@yahoo.com

John Marchioni
585-272-7870 or john@jmlawfirm.com

Once you decide if getting an LLC is the route you would like go in purchasing investment properties, I welcome the opportunity to apply for the job of being your Realtor. Feel free to look at my website to see all currently available properties. Should you have further questions regarding investing in Rochester, please contact me via phone or email.

Thank you and I look forward to hearing from you,

Laura
Laura Swogger
Associate Broker, GREEN
Keller Williams Realty
2000 Winton Rd. S.
Rochester,NY 14618
585-362-8925
LauraSwogger@kw.com
Web Reference: http://LauraSwogger.com
0 votes Thank Flag Link Tue Mar 9, 2010
Protect yourself --regarding any legal issues your best source of advice is an attorney.
0 votes Thank Flag Link Tue Mar 9, 2010
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