Will using income to pay downpayment from HELOC pierce the LLC corporate veil?

[Shane Duncan]

I am closing on a multi-family soon and the mortgage will be in the LLC's name. All income and expenses will be handled by the LLC. The problem is that I am using a HELOC to assist with the downpayment for the loan. If I use the LLC's income to pay the HELOC payment directly, will that pierce the corporate veil? I want to be very careful to maintain the limited liability an LLC affords. Should I transfer the downpayment to the LLC account as an owner contribution and then log the income as repayments back to me? Then I can use the repayments to pay off the HELOC? I just want to make sure I maintain the liability protections but I still need to repay my HELOC without coming out of pocket.

[Lateefah Mathews]

Quote from @Shane Duncan:

Quote from @Stuart Udis:

@Shane Duncan great post! Most merely create an LLC and believe that in itself offers protection. It's the way you operate your business that's of greater importance. Your acknowledgement puts you way ahead of the curve. While it is difficult to pierce the corporate veil and the standards differ depending on the jurisdiction, commingling of funds is the leading reason why plaintiff attorney's succeed.

Thank you so much for the help. My plan is to keep staunch records for money transfers, and for this large contribution, record it as a loan from me to the LLC. It will pay me monthly payments at a set interest(same as my HELOC) and I will then pay the HELOC off from my personal funds. I want to play it as safe as possible and not have the LLC directly paying my personal bills.

 I totally agree, build that skin-tight paper trail and stay bulletproof! You are definitely on the right path.