landloard protection? - Posted by Nancy PA-- CA

import · October 21, 2003, 11:34am

Posted by Doc on October 21, 2003 at 21:09:16:

er…you mean having the judgement executed, not as in capital punishment, right?

import · October 21, 2003, 11:34am

Posted by Nancy PA-- CA on October 21, 2003 at 11:34:05:

I’ll be moving to CA soon and I have a rental property in PA under the management of a property manager. The house is very new, in a nice and rapidly growing/appreciating neighborhood… Since I have only lived here for a year, I want to rent it out for a couple years, then do a 1040 exchange for another property in CA.

I have a lot of equity in the house, I wanted protect myself from any law suite in the future if anything happens to the tenant on my property. I was thinking of having a Land Trust or even forming a LLC. so I called up a real estate atterney to discuss it. She said that in PA, they don’t do Land Trust, and forming a LLC is “over protecting” and making things too complicated… she said that a good land lord insurance and a contract with the property manager should be plenty of protection for me.
what are some protective masure you take to protect your interest and reduce liabilities as Land Lord?
thank you !!

import · October 23, 2003, 10:05am

Thank you!! - any one formed LLC online - Posted by Nancy PA–CA

Posted by Nancy PA–CA on October 23, 2003 at 10:05:20:

Thank you all for your help!
I will go ahead and form an LLC. Has anyone formed LLC online for under $400? is it a good and reliable service to use?
thanks

nancy

import · October 21, 2003, 5:53pm

Rental In Pennsylvania… - Posted by David Krulac

Posted by David Krulac on October 21, 2003 at 17:53:06:

but living in CA, would not be my first choice.

I never met a rental manage, that would manage my property as well as I do.
Stuff happens, manager leaves, gets better job and property goes to heck in a hand basket.
How about a 1031 tax free exchange?
If you must long distance rent, then have plenty of insurance, including an umbrella policy, and for the costs of an LLC in Pa. you could sleep better at nights.

David Krulac
Central Pennsylvania

import · October 21, 2003, 1:29pm

Re: landlorrd protection? - Posted by Bill Bronchick

Posted by Bill Bronchick on October 21, 2003 at 13:29:03:

Ask your attorney what happens when you are sued for $10 million and your policy is only for $2 million.

import · October 21, 2003, 1:20pm

Call Another Attorney… - Posted by Randy (SD)

Posted by Randy (SD) on October 21, 2003 at 13:20:32:

Is this the only real estate attorney in PA?

import · October 21, 2003, 11:48am

Re: landloard protection? - Posted by E.Eka

Posted by E.Eka on October 21, 2003 at 11:48:18:

If your attorney says you’re over protecting, then go ahead and do it. You can’t put a price on peace of mind. Insurance, and maybe deeding it to a land trust/or LLC is another way. Depending on the state you’re in.

import · October 21, 2003, 11:45am

Re: landloard protection? - Posted by Antoine (GA)

Posted by Antoine (GA) on October 21, 2003 at 11:45:58:

Nancy,

I have never heard of “over protecting” I have one rental and it is deeded to a LLC. I also plane to place it into a land trust. Landlord insurance is also necessary to have.

import · October 23, 2003, 10:03am

Re: landlorrd protection? - Posted by Nancy PA–CA

Posted by Nancy PA–CA on October 23, 2003 at 10:03:04:

thank you very much for your response! I’m reading your book right now on flipping properties and it’s great!

I spoke with a few atterneys here in PA, they are all not familiar with Land Trust, they said they’ve never seen it done in PA. How can I convince them that it can be done in PA? what should be a reasonable fee to do it?
I do want to form a LLC and deed the house to the LLC.
I have read that doing a Land Trust and make the LLC the beneficiary will prevent the Due on Sale Clause to be activated… How do I do this in my case where I might not be able to have a Land Trust? I want to just to ignore the Due on Sale Clause and continue making payment in my name (I have read from your posts) , hope I can convience the atterney here that it is okay to do so.

thanks a lot!

import · October 21, 2003, 2:17pm

Legal question - Posted by randyOH

Posted by randyOH on October 21, 2003 at 14:17:54:

Bill,
I know this is a big subject, but I would like to ask for some clarification on liability.

My understanding on liability is that you are not automatically liable for damages merely because you own the property. You are liable because you are responsible for the problem that caused the damage. Is my thinking on this correct?

If this is correct, then I don’t see how an entity gives you much protection. If the entity owns the property, you would still most likely be personally responsible for the problem that caused the damage.

For example, suppose the house burns down and someone is killed. The evidence shows that there were no smoke detectors. You would be sued because you did not install smoke detectors. How would an entity protect you from this lawsuite?

Thanks in advance,
Randy

import · October 21, 2003, 2:02pm

Re: landlorrd protection? - Posted by E.Eka

Posted by E.Eka on October 21, 2003 at 14:02:10:

Her attorney will then advise her to file for bankruptcy and will want to represent her in bankruptcy court.

import · October 21, 2003, 2:23pm

Re: Legal question - Posted by Bill Bronchick

Posted by Bill Bronchick on October 21, 2003 at 14:23:24:

Ahh, yes, but if the claim is, “the owner was negligent for failing to do X, Y & Z”, the owner is not YOU PERSONALLY, but the entity. If the claim is, “Randy discriminated against me”, then the entity won’t help - both you AND YOUR EMPLOYER (the entity) would be liable. But, if your property manager did the act of discriminating, then HE would be liable AND your corporation, but not you personally.

Get it?

import · October 21, 2003, 4:42pm

Two more questions, if I may… - Posted by randyOH

Posted by randyOH on October 21, 2003 at 16:42:03:

What if you manage your own properties? How much liability protection are you getting by having an entity own the properties?
Even if you use a property manager, aren’t there many ways a creative P. I. lawyer could show you to be personally liable? For example, your property manager says (truthfully or untruthfully) “I work for Jones, LLC, but I just do what Mr. Jones tells me and he did not tell me to install the smoke detectors.” How does the entity protect Mr. Jones?

import · October 21, 2003, 4:50pm

Omission vs. Comission - Posted by Bill Bronchick

Posted by Bill Bronchick on October 21, 2003 at 16:50:35:

If the entity owns the property, it will protect you personal from OMISSIONS

If you COMMIT an act, then you are liable, too.

import · October 21, 2003, 5:00pm

In other words, not much protection, right? nt. - Posted by randyOH

Posted by randyOH on October 21, 2003 at 17:00:57:

nt

import · October 21, 2003, 5:08pm

Hello… - Posted by Bill Bronchick

Posted by Bill Bronchick on October 21, 2003 at 17:08:53:

This is the last reply…

It’s a LOT of protection - breach of contract, slip and fall, failure to maintain the property, mold claims, improper security deposit withholding, etc etc

But, if you do something particularly stupid yourself like discriminate, lie, cheat and steal, no corporate entity will protect you.

And, if you end up with a judgment against you for something you did yourself, inadvertently, having your other assets protected will help protect you from execution.