LLC question and management

[Ysanne Isard]

I own 3 buildings each under their own LLC. I did this to limit the loss should any lawsuit arise.

I also manage these buildings myself, and now I am reading that if there is an issue, the tenant could sue the LLC and me as the manager, thereby getting around the LLC wall and into my personal finances.

Should I then set up an LLC just for management? Should I set up an LLC and then pay myself? Or is this getting overboard?

[Bill Gulley]

@Ryan VanPatten

First place to start by defining and identifying what you want to do, specifically.

One aspect of attacking a business entity is to say that the business was operating outside its stated scope of work or its mission. The catch all "and to do all other things usual and customary as allowed by law" really doesn't cut it literally.

You should avoid using RE buzz words or investor terminology like "wholesale" "birddog" "Lease-Option" as these terms are unique and opens the door to other determinations. Use something more like, buy, sell, lease, manage, repair, rehabilitate, develop, construct and finance residential and commercial real estate. then use that catch all of all other things. This will better define that catch all phrase to those specific areas, what is customary in selling or financing.

You may think that your company will be a one member LLC, you caet it up that way but leave the door open to admit other members, consider how profits may be paid out, the voting rights of others, such rights can be limited, do you have a manager or will all members be active in operations.

You need to look at the default provisions by state law as to what happens under different events and if that's how you want it to work you can go with that or you can specify different provisions so long as they are not contrary to law.

Think ahead, years down the road as to where you might be, what you might do, as some long term considerations will help draft a better entity. You can always amend articles and the operating agreement, change tax elections (under restrictions) but it will cost you money and time to do so, it may effect accounting or other aspects of operations in trying to make changes in the future. Providing greater flexibility in the beginning is the best way to go.

What you get from instantlegalforms.com won't be as good as a well thought out plan, speaking to a generalized attorney will be a toss up as to who you luck out with. Many of these cut rate legal service types will, in my opinion, will be new attorneys, those struggling for business, intern types or old retired guys that may lend experience from 15 years ago. I just can't imagine an expert RE attorney or corporate attorney working for the pittance paid through cut rate legal services. And, while they may be in your state, if they aren't in your jurisdiction, they won't be so aware as how things are viewed in your area.

Good luck:)