Will my husband be liable?

[Mary Joe]

Say the rental properties are all under my name personally, (no LLC set up).

If something happens and the tenant sues, and the court rules in the tenant's favor, will my husband be liable in any way?

For example, if the court awarded $1M to my tenant, and I only have $500K of assets to my name, will the court seize assets owned jointly by my husband and myself? What about assets that are under my husband's name only, will those assets be seized too?

any advice would be appreciated.

Thanks

MJ

[Jerry W.]

@Mary Joe , I will take a stab at answering your question, but keep in mind the laws in New york may be different than in my state.

First there are several forms of ownership using more than one owner; 1.) Tenants in Common, 2.) Joint tenants(usually with rights of survivorship) and 3.) Tenants by the Entireties.

This is important as in tenants in common your ownership share could be taken in a lawsuit but your husbands share would not be touched. The same is true in joint tenants usually, there are some exceptions. Tenants by the entireties is only available to married couples. it means both of you own the property entirely. The legal effect in most states I believe is your creditors cannot touch any of the property unless both you and your husband owe the debt.

Next liability of your husband in case you are sued and they win a million dollars. Liability in a lawsuit is usually based on duty, breach, damages, and a causal relationship between the breach and the resulting damage. if your husband was not the one breaching the duty he has no liability.

There are debts that spouses are automaticly liable for if their spouse incurs it. These are normally necessities like medical care, food and shelter. If your spouse has a credit card in their sole name and buy a boat you are not liable. If they are hit by a car and are taken to the hospital you are liable. Spouses are responsible the care of another but not the luxury of another.

There are some exceptions to liability from a lawsuit if your husband had an independent form of liability like he let you drive the car knowing you were drunk and you cause an accident, but usually one spouse is not liable for the torts of another.

This is very over simplified but I hope it helps. The general rule is one person is not responsible for the bad acts of another unless they were a party to the bad act as well or an accessory before the fact.

I can give you an example of your scenario. Much of my real estate is set up in a Subchapter S corp. My wife owns none of the stock. Only I cosign on the bank loans, only I work on the houses, although she does the books.

If I get sued for more than my liability policy they can collect their judgment from my corporation if it was involved or garnish and sell my shares of stock. If I have a car in my name they take that car. They cannot touch any property owned solely by my wife or jointly by us as tenants by the entireties. If I default on my mortgages in the corporation they can sell the houses, and go after me because I singed a personal guarantee, but again they cannot go after my wife's assets or our joint assets, unless she was involved in the bad act that harmed the folks suing or unless she guaranteed the mortgage.

Hope this helps some, keep in mind I do not know the law in your state.

(PS give a vote if this helped)