Holding Real Estate in an LLC

A Limited Liability Company, also called an LLC, it’s a type of business entity.

An LLC is intended to shield the LLC owners, called members, from lawsuits filed against the operations or property held in the LLC. Many real estate investors use LLCs to hold investment or rental property.

Assuming the LLC is properly managed and operated, successful lawsuits filed against the LLC can collect LLC assets, but not the owner’s personal property.

However, an LLC owner is not shielded from lawsuits where she was personally responsible for the injury behind the lawsuit. This can happen, for instance, where a property owner personally performs repairs and leaves a dangerous condition that leads to injury.

Holding multiple properties in one LLCs can prevent collection against the owner’s personal assets. However, creditors can collect against any property held in the LLC.

Some clients create multiple LLCs to hold different properties. The property held in one LLC could then be shielded from lawsuits against properties held in other LLCs.

Finally, transferring real estate to an LLC can cause complications with property tax. Great care must be taken to avoid a property tax reassessment.

Contact a Milpitas, California LLC Attorney today for help in creating or managing an LLC to hold real property.