Umbrella liability vs. owning property in an LLC. Your thoughts?

[Trevor Justice]

Last year, I set up a CA LLC owned/controlled by a WY LLC, with the intention of deeding my 20% share of an apartment building into the LLC. (I've been on title as 20% co-owner.)

I was able to transfer my share with the City of San Francisco. Good. But then our lender found out.

Even though my LLC is single member and disregarded, the lender is requiring $4,000 to re-underwrite the loan. Plus all of the partners have to re-submit financial documents.

Plus we'd have to revise our Tenancy In Common agreement to reflect that my share is now owned by the LLC.

My income has been down for two years, mostly due to lots of vacancies. So if I pay this $4K, it will sting.

But if I don't, then I will have spent several thousand setting up the LLCs for nothing.

Plus, if I get sued for everything I own, beyond the limits of my insurance coverage, I'd lose my share of this apartment building, along with everything else. Since it would be in my name again.

If you've ever been sued, or have any thoughts about whether to bite this bullet, or simplify with umbrella liability, I'd love to hear from you.