Members of LLCs who own real estate as part of their investment portfolio also derive favorable tax treatment from the Internal Revenue Service. While this is by no means cause for celebration, it's better than losing the property altogether. Instead, the judgment creditor is typically required to obtain a "charging order" from the court that, in turn, becomes a lien on the real estate. ![]() ![]() If a third-party succeeds in obtaining a monetary judgment, it-the judgment creditor-can't force the sale of real estate held by an LLC-the judgment debtor. Hence you are provided anonymity, and your personal assets are not exposed.Īnother reason to place a property title in the name of an LLC is that it gives you liability protection against monetary judgments if a financial dispute involving the LLC arises. More importantly, only the LLC's assets would be obligated to pay an award of monetary damages if the injured party's suit is successful. If, on the other hand, you placed the deed and title to the property in the name of an LLC, only the LLC (and not you) would be named as a defendant. ![]() But if the amount of damages the injured party seeks exceeds the policy limit, your personal assets could be exposed. LLCs provide that protection.įor example, if someone is injured while visiting a property you own, even if you do not reside there or have any connection to the guest, they could potentially pursue a legal claim against you, the owner, for their injuries.Īssuming you acquired property insurance to cover such incidents, your homeowner's insurance policy would provide coverage up to a particular monetary limit. You want the best option for limiting your personal liability should an unforeseen circumstance arise relating to your property. Here are the pros and cons of forming an LLC for real estate investments. Owners often prefer to form an LLC when purchasing real estate-or when transferring titles-so that the LLC becomes the legal owner of record, rather than the individual members. It was such a good experience that I now consider Jon a friend and will go out of my way every chance I get to find him more business.Limited liability companies have become one of the most popular business entities for acquiring real estate. If you want an experience where your opinion is important, where you can trust the process and feel really good at the end, you should reach out to Jon. Take a read through his website, about covering innocuous fees, coordinating cleanouts, taking care of things that he doesn’t want credit for and you only find out about later….it’s all true. On a professional level, he has broken the mold of what we know to be the real estate brokerage business. Not only does this make for a pleasant experience, but when things get difficult, as they inevitably will during a transaction, knowing who you are dealing with, and that you can trust Jon, is invaluable. On a personal level, there is no outer shell, you know what you are getting from the minute you meet him. He is unlike anyone in the business from both a personal and professional standpoint. It has felt like a very transactional business, lacking the personal touch, honesty and accountability that you would expect for such a personal and emotional experience. This was our 10th real estate transaction and we had been completely underwhelmed by the real estate industry to date. "We recently worked with Jon and it was, BY FAR, the best experience we have ever had.
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