Syndication Asset Protection

[David White]

These questions are for all of my syndicators out there! Which ownership entity method (LLC, Corporation, etc..) are you holding your assets in? And how do you protect your investors from liability concerns across various assets? For example, if a passive investor invests in apartment building "A" off of Main Street, will they be held accountable if apartment building "B" comes into legal trouble of any kind?

[Brian Burke]

We usually own the property in an LLC. In some rare cases we use a limited partnership. In either case, passive investors in LLCs and limited partnerships get limited liability protection. Your exposure is generally limited to the amount you invested.

Having said that, the LLC isn't the primary vehicle that offers you protection. The insurance policy is. Most of our syndicates have liability insurance for $1 million and an umbrella for at least $10 million and sometimes as high as $25 million.