Fundrise, an investor liability question

[Chris M.]

Howdy,

New to real estates crowdsourcing, and there is a nagging question in my mind regarding the implications of investing in Fundrise's eReits or eFunds. 

Simply put, if Fundrise is sued are unitholders(which are, in fact, members of the project LLC) able to be targeted for their personal assets in a veil-piercing situation?

Also, how about other crowdfunding names, like Realtyshares? Just wondering if the crowdfunding train is one bad lawsuit away from catastrophe. 

Thanks for any guidance!

[Chris M.]

Originally posted by @Ian Ippolito:

Here you can see what it takes to pierce the corporate veil:

https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html

It mostly happens to small, closely held companies. I would be concerned about it with Bob, the homegrown syndicator. I personally am not concerned about it with a large, aduited fund/company. But if it worries you, then it may be worth the peace of mind to form an LLC. Although arguably if the veil is somehow pierced on the fund LLC, then perhaps it might be somehow be ruled as pierced on yours as well. So check with an attorney first.

This is really above and beyond, thank you. From the link you provided, this excerpt goes a long way towards making me feel more confident:

"But courts will impose personal liability only on those individuals who are responsible for the corporation or LLC's wrongful or fraudulent actions; they won't hold innocent parties personally liable for company debts."

Seems that unit holders would be considered innocent so long as they have no managerial influence in the company, so I think this answers my question.

Many thanks!