 |
|
Ask a Lawyer -- LLCs
LLC Question 148
Question:
I own real property in both Maryland and the District of Columbia. 2 rental homes in Maryland (one my primary residence) and 4 rental properties in D.C. Would you recommend setting up 6 separate LLC's? or 2 (one in Maryland) and one in D.C.? Thank you for your time.
Response: My experience is limited in the real estate industry so I would not count myself as an authority on the topic. The issue of multiple LLCs to hold real estate when the members and ownership percentages of each LLC are the same boils down to compartmentalizing liability from each LLC. By the term "liability", I refer not only to bank loans but, also, tort liability from personal injury. If your financial situation is such that the bank financing your ownership of these rental properties does not require you to personally guaranty the loan nor to cross-collaterize the loan against your other properties, then separate LLCs might make sense for you. If the loans are cross-collaterized, then the decision is whether you wish to form separate LLCs in an attempt to isolate tort exposure. In accessing the last decision, the level of liability insurance coverage you have on the properties protecting against these sorts of claims comes into play--the higher the policy limits, the less concerned one is about damage awards in excess of coverage limits and their collectibility against other properties.
Submitted: 11/20/2007; jae, maryland
Response: 11/21/2007; JJR
Add A Comment
|
|
Ask a Lawyer LLC Archives
DISCLAIMER
The above is provided for informational purposes only and is NOT to be relied upon as professional advice. The information presented on this site comes without any warranty of correctness and, therefore, should not be relied upon. This service is not a substitute for the advice of a professional. No attorney client relationship is created through use of this site.
|
|
 |
