On your lease - Do you put yoursef as Landlord or your LLC?

Question

Greetings,So my simple question is when you sign a lease with a tenant, do you place yourself as the "Landlord" or do you place your LLC as the landlord?In my previous leases, I have stated my name as the Landlord, and I am realizing it's not too smart, since if (when!) there is a judgement my name would be on record - for a longtime - even though this was a business dealing and not a personal deal.In my case, I own my properties in my name and self-manage my properties with a Single member LLC., and I am thinking of using the LLC name as the "Landlord". Then, for any judgements the LLC would be named. So, this is not about evading risk but to keep my business and personal dealings separate.Thoughts? Much appreciated!Ron

Dawn Curry · Answer

I own my properties under an LLC but sign my name as the landlord since I’m under the LLC. From my understanding, all my personal properties are not tied in this investment since it is owned by an LLC, not my personal name. Anybody correct me if I am wrong please!

Scott L. · Answer

Significant liability attaches to ownership as well as management. Your LLC isn’t really buying you any protection unless it owns title to the property. I manage a couple properties this way, but am under no illusion that it provides any liability benefits. It’s more like a trade name and DBA for me, and a way to manage my financials.And to answer your question, the landlord is the OWNER of the property. If you specify the LLC as the owner when it is not, then you may not have a valid lease. I list the LLC as my “property manager” and payment address.

Colleen F. · Answer

Where I have an LLC I sign the lease on behalf of the LLC. The contract is between the LLC and the tenant. They make checks out to the LLC. The LLC business account pays the bills. If you evict in some states an LLC must have a lawyer. So it depends on the structure of the LLC etc. , what it was formed to do,who owns the property, check with your lawyer if you are concerned.

Scott Smith · Answer

The reason people don't like to do this is that it adds a layer of complexity and expense, but it does offer many rewards. I often see investors pair a traditional LLC with a Series LLC to function in this capacity. A traditional LLC is the traditional form of limited liability company that acts as a shield to limit the personal liability of an investor. A traditional LLC is typically set up in conjunction with a parent Series LLC to act as the Operating Company, or shell company, for the parent Series LLC. The reason for this is to keep the name of the parent Series LLC away from day to day operations, which limits the risk of liability. When used as an Operating Company, the traditional LLC can enter into contracts, handle repairs/contractors, enter into property management agreements, collect rents, and advertise. Any profits or assets received by the Operating Company will be transferred over to the parent Series LLC, thus creating separation between the management and the assets. You could just think of the parent Series LLC as the ASSET HOLDING COMPANY and the traditional LLC as the OPERATING COMPANY.It would require extra costs, since you are involving the formation and operation of an additional entity. But you can get pretty creative with these entities to implement additional layers of protection by utilizing additional tools - and in my opinion real estate investors under-utilize trusts. While the scenario above will limit liability, your name is still all over the LLCs, so anyone looking to find you can do so easily. That's where adding privacy through anonymity can come into the picture.A layer of anonymity can be added to the traditional LLC by utilizing an Agent Trust as Member/Manager of the traditional LLC. Instead of listing the investor's name as Member/Manager on the publicly filed Certificate of Formation, the Agent Trust is used. Thus, the trust acts as an "agent" for the investor. The document used to create the Agent Trust is a Declaration of Trust Agreement and is a private document that is not recorded or filed in the public records. This trust agreement lays out the management and ownership structure of the Agent Trust. And since the Agent Trust is the Member/Manager of the traditional LLC, the trust agreement thus lays out the management and ownership of the traditional LLC. Once and investor has the structural anonymity formed at the LLC level they can also remove their name from ownership of the property on public record. This is accomplished by transferring the property into a land trust and having your attorney sign as a "nominee trustee" before having the role of trustee granted to you after the signing. This means anyone looking at the property will see it is held by a land trust signed by "attorney X." If they wanted to dig into it and see the actual documents it would be costly, since the document is private and protected by attorney-client privilege.Asset protection is a bottomless rabbit hole. In the end you just want to ensure you are taking the proper steps to minimize your exposure and keep your assets protected. For someone who is just operating a property or two through a single LLC it would be hard to justify spending a massive amount of money creating an elaborate asset protection strategy. But for someone with several properties and growing - it is invaluable. Ideally you would just find an experienced attorney who could guide you through the process - there are some very expensive strategies out there that really don't protect investors... Apologies for the long message. Kind of got rolling on it. I did lay out a general approach to asset protection in one of my more recent articles, so feel free to refer to that. Feel free to reply with questions. I have not proof read this, so I may have skipped stuff in the explanations.

Patrice Penda · Answer

Here is my view, the landlord is the owner of the property that is being rented out.So if you own those properties under your name, even though the LLC is the property manager, you are the landlord. Your current setup doesn't really keep your business and personal assets/dealings separate.To do so, you'd need to transfer those properties to an LLC you own or create a new one for that purpose.If there is a lawsuit, I'd imagine that your name, as the owner, would appear in the documents filled.Just my 2 cents, I am not an attorney, nor a CPA

Mike Bonadies · Answer

@Rob Cucugliello - This is a very state specific question as its dependent on state specific landlord-tenant laws. My properties are all in New Jersey (South Jersey to be specific) so I can speak to that state. First off, I do want to state that I'm not a lawyer and that you should consult your specific situation with your lawyer for the definitive answer. The answer is two folded in NJ. To my understanding the law states here that you either have to have an ownership interest in the property or you have to have a RE brokers license to collect and enforce a lease.Collecting rent and enforcing a least for Properties in an LLC:1. The collecting entity must either have ownership interest in the property (Example - Any member of the LLC or someone who works for the LLC who either owns your LLC or has partial ownership of the house)or 2. Have a real estate brokers license (Example - if you have a PM company they must have a team member who is a real estate broker)Collecting rent and enforcing a least for Properties you personally own:1. You may collect rentor2. Have an LLC who has either an ownership interest or has a a member who has a real estate brokers license As you can imagine this gets tricky when you personally own your property but try to send everything through your LLC. Unless your LLC has ownership interest in your property or has a member with a brokers license its legally vulnerable. If you try to claim that you own the property as the owner of the LLC who also personally owns the property the court can pierce the veil.All of this being said, the only time I've heard people running into this issue is with professional tenants who intentionally try to work the system. Otherwise I haven' heard of blowback.-MB

Mayer M. · Answer

LLC

Thomas S. · Answer

You are the landlord not the LLC. If you put the LLC as the landlord good luck when it comes time to evict. All you will do is complicate your life.You are the owner, you are the landlord, sign the lease.

Rob Cucugliello · Answer

Hey All!Doesn't seem to be a consensus on here on how to write the lease up. I have some properties in my personal name and some properties under my LLC (going forward all will be under my LLC. So I'm trying to ensure my Leases are properly written. I need finances to go thru my LLC, so checks need to be made out to the LLC name. But how do I properly write the lease up? Any definitive answers here?

Greg H. · Answer

The OWNER of the property!If your property is owned by an LLC and you put yourself as the landlord you are taking on the liability that you are attempting to protect your self from in the first place