Out-of-State company as property owner for asset protection??

[Christopher Lee]

Hello Friends here,

I run a real estate business in California. A while ago I saw a post here teaching landlords how to avoid liability by setting up a company/ the property owner in another state, so the tenant cannot sue the property owner in the state where the rental property is physically located but in the state where the company/ property owner is filed.

Can someone provide more detail about how this works?

I spoke with my broker and the real estate attorneys we usually work with, they said, as long as the plaintiff/ tenant's attorney is able to file a motion or whatever and relate the intentional of the out-of-state company with tax evasion matter, then they can have the liability court in the city where the property is located after the first motion is resolved.

According to the real estate attorney, unless it is a big corporation with many investments under its name, it is very suspicious to have an out-of-state company when the company owner lives, works, and files tax in another state. It's even more suspecious when there is no management team and actual employees working for that out-of-state company in the state where the company is filed.

At least two California real estate attornies have confirmed the above strategy, so I really want to know how this whole thing works properly without any risk on the investor's end.