Section 8, LLCs, and Asset Protection

[George B.]

Hi all, I have a question about asset protection strategies and Section 8. My LLC recently closed on a property with a Section 8 tenant already in place. My original intention was to open a separate LLC that would be responsible for the operations of the property and would take possession through a lease. This entity would be the entity with which any contracts, leases, etc. would be involved. (I confess I am neither a lawyer nor an expert, but I have read many legal articles about this sort of structure)

There was a property management company already managing this property, and I am considering employing their services. However, they have claimed to me that the structure I proposed above will not work for Section 8; that Section 8 requires the Owner of the property to be listed as the landlord with whom the lease is established and that it cannot be a second LLC that has possession of the premises. I am not equipped to argue otherwise as I have never dealt with Section 8, but I question the property manager because when I inquired further by creating an example (you own a property, a company expresses they want to lease the property for 100 years, and then the company sublets the property to a Section 8 tenant), the property manager tried to claim that what I described is "illegal," which I know not to be true...

Does anyone have any insight to share on this matter?