Another Attorney Question

[Brandon G.]

I found an attorney in my area who specializes in real estate and has stellar reviews. The only thing is on her website description it mentions that "commercial landlords and tenants value her extensive experience..." and "multi-family housing, including HUD subsidized..etc." but no mention of residential.

So my question is, generally speaking would a lawyer with extensive experience in commercial real estate also be a good fit for a residential investor or are they two separate animals all together?

[Hattie Dizmond]

@Mark Whittlesey 

You're right, but it's dependent on the policy, what it covers and what the limits are.  It is also, in my opinion, partially determined by what state you're doing business in and what your personal goals & risk tolerance is.  One of my goals is to ensure that my personal assets are protected from any of my business activities.  Even if I have a policy that is sufficient to pay any claim & will cover my legal costs, if I am sued personally there are any number of legal maneuvers that could result in my personal assets being tied up, while the proceedings are underway.  We live in a highly litigious time and aggressive lawyers will file claims and place injunctions on anything they can to force a settlement. 

***Disclaimer*** I'm not a lawyer.  No action should be taken based upon this information.  Please consult your own attorney.

In Texas, the gold standard in asset protection is referred to as the "Texas 2-step". It's comprised of 2 LLC's. One LLC is used as an operating front and has its name appear on any contract and as the receiver of income. The 2nd LLC is a holding company with a DBA in place. The holding company holds the assets, but it never conducts any business in it's own name. As long as the owner(s) of the LLC's do not knowingly engage in fraud or illegal activities, which would "pierce the corporate veil", you are personally protected from litigation. (Again, I live and invest in Texas, which is not a torte friendly environment. I love Texas!!!) If you want to make it exponentially harder for someone to even find the name of the holding company LLC, individual properties can still be held in anonymous Trusts. However, all a trust does is make it very difficult to trace a property back to an owner. It doesn't provide any legal protection for the owner.

I understand that in some states taxes, the absence of Series LLC's as a tool, and other conditions may make the LLC option less favorable. However, in Texas, for me, LLC's make the perfect asset protection vehicle with very favorable franchise taxes and no Corp income tax, since I have chosen to be taxed as a Sub-S with pass through taxation.

I wouldn't suggest it as the answer for everyone, but it makes sense for me & my partners.