LLC Property and a Property Manager walk in to a CPA Office

[Chris Tedeschi]

Sorry, I couldn't think of a better title >_<

So, here's the question: If you have own a property which you moved into an LLC AND you have a property manager, managing said property, how should payment of his services work?

So, before our home was in an LLC, all rent went to the property manager, he sent it to us and removed his fee from it and any additional items (lawn care costs, HVAC repairman, etc...)

Now that it's in an LLC, does the rent he collects need to come to us completely first and we pay him for his services from our bank account?

To me, its an accounting question and I'm not sure if legally it all needs to come into our account and then be paid back out or not.

Can someone give me an education on this please.

Thanks,
Chris
 

[Mike S.]

Quote from @Christopher Liu:

Quote from @Simon W.:

Quote from @Christopher Liu:

@Simon W. I would modify it as follows : instead of having the property manager send you the rent minus his expenses he should send it to a bank account opened in the name of the LLC.

What? Why? 

Because the property is now owned by the LLC.

That is correct;
The money should go from the property manager to the LLC. By sending the money to you, you are commingling asset and in case of lawsuit the opposite attorney will tell the judge that your LLC is a sham and an alter ego as you receive the money directly. If you don't respect the separation of your LLC yourself why should the judge do? So all the asset protection purpose of your LLC will be voided (piercing the veil).

Open a bank account for your LLC, update the contract with your property manager to mention your LLC as the client/owner of the property (and not you), make sure that you sign all documents for the LLC with your title for the LLC and not as an individual, update all insurances to put the LLC as primary insured, and possibly you as agent of the LLC as additional insured, do not commingle money, keep good bookkeeping and follow the formalities of the LLC operating agreement (members meeting; state filing; etc...)