I have heard many podcasts with lawyers saying that real estate is the most common source of lawsuits and that its not if but when we'll get sued. A lawyer obviously has a vested interest in scaring us but I was wondering if anyone actually knows of any data on this topic. What is the actual risk of being sued? Are there studies saying that X% of real estate investors have been sued? Does it depend on how much real estate you own?
It seems like there are strong opinions about an LLC, multiple LLCs, series LLCs, Something in Delaware, offshore accounts, umbrella polices but I have yet to see any actual data on the topic.
Calling all quants and data nerds, I need help.
Thanks
Dan
PS, I have 4 offers out there so I hope to be under contract on my first (or first through fourth) properties soon.
I think Lawyers, by nature, are skittish. We see the worst-case scenario all day, every day. People typically don't come to lawyers when everything is going swimmingly. In fact, we are paid to think about all the bad things that could happen and make sure that the contracts we use are air tight.
That being said, any endeavor over a long enough time horizon runs the risk of having legal issues. I think it's inevitable when you are making any kind of impact.
It's just a risk verse reward. LLCs are nice because they can limit any potential claim to the assets within that LLC. But 99/100 you probably don't actually need an LLC.
I don't have any data but I just wanted to weigh in.
I think Lawyers, by nature, are skittish. We see the worst-case scenario all day, every day. People typically don't come to lawyers when everything is going swimmingly. In fact, we are paid to think about all the bad things that could happen and make sure that the contracts we use are air tight.
That being said, any endeavor over a long enough time horizon runs the risk of having legal issues. I think it's inevitable when you are making any kind of impact.
It's just a risk verse reward. LLCs are nice because they can limit any potential claim to the assets within that LLC. But 99/100 you probably don't actually need an LLC.
I don't have any data but I just wanted to weigh in.
Thanks Dylan! So nice to get a lawyer's opinion. I totally get where you are coming from. I'm a physician during the day but I try hard not to recommend a costly intervention unless there is good evidence that it is necessary.