All Forum Posts by: Andrew A.

I take personal pleasure in bringing actions against sellers like this when clients are put in a tough spot. Also, perhaps I need to change markets, because you would've spent less than $10,000 in fees here to force the sale, and we have case scheduling standards that would've brought the issue to trial in a matter of months. Additionally, many states have statutes which provide for attorney fee shifting (losing party pays winner's fees) in the event of bad faith, and this clearly falls within the realm of a bad faith specific performance action.

Sucks to hear you took the hit but glad it will still work for you!

@Wendy Carpenter - I had not heard of incorporate.com until reading your post. I had of course heard of similar services, but not this one in particular. Interestingly, it would be more expensive for someone to use this service than to call me and have personal connection with an attorney. Also, they're marking up the state filing fees (at least in Iowa). The filing fees here are $50.00 when forming an LLC, but they're charging $100. Our office certainly doesn't mark up the fees, perhaps I'm missing out!

As an aside, there's definitely a lot of virtual providers out there, but having a relationship with local professionals when starting a business will (assuming you find a solid provider) more than make up for the costs associated, and when (not if) things ever go wrong, you've got a team of professionals already familiar with your operation who will stand by you, by your business, and by their past advice/services to make sure you stay protected.

Best of luck!

@Chad W. - I find your inquiry a bit confusing.

A charging order was, originally, a legal invention intended to protect partners in a partnership from losing their property if their partners went out and ran up a bunch of debt and wound up sued for it. So the charging order "charged" the debt against the one partner's interests in the partnership assets, so that when distributions were made, the judgment debtor's share weren't made to the defunct partner, but rather to the judgment creditor. More recently, when people have tried to hide behind charging order protections in single member LLCs, and then simply refuse to make distributions so that the creditor never gets paid, courts have seen that for what it is, a sham, and have refused to allow those protections to extend for obvious reasons.

The whole reason charging order limitations don't apply in the context of a single member LLC, is because there are no partners to protect, so the protection is unnecessary.

I'm not licensed in Florida, but I have brought many types of actions against various types of entities, and anytime there is an entity structure in place that would serve no purpose but to prevent a creditor from getting what's due to them, the veil can, and likely will, be pierced and a competent attorney will not only work their way up the ownership chain through various entities, but they'll eventually come after your personal assets too. Indeed, anytime I see layers of entities in the course of litigation, I see that as a huge red flag and double down to make sure I find assets wherever they exist, and most judges are pretty helpful in making this happen.

Nothing contained herein is legal advice, and in order to fully answer your question you'd need to hire counsel in both Wyoming and Florida.

@Curtis Bidwell - I'm glad to hear you've been able to handle conveyances independently, but this is dangerous in the extreme for anyone who is not intimately familiar with corporate principles, accounting matters, and even just the simple differences in the types of deeds and exemptions which may apply to each in various situations. I speak from experience when I say, I make a lot more money off of botched conveyances people tried to handle themselves than I do on making sure it's handled properly from the outset.

@Stanley Yang - I reiterate, an ounce of prevention is worth a pound of cure (read as, paying a professional to handle a conveyance is cheap when compared with potential litigation if things go south).

@David Ptak - From your post, I'm not sure exactly what your intention of transferring the purchase contract to an LLC is, other than to gain some liability protection. While liability protection is great, I would encourage you to consider your overall investment picture. Liability insurance is necessary whether you own something personally, or in an entity, and that's where your main liability protection really stems from. That said, if you have a high net worth, lots of properties and an overall large operation, an entity (or multiple) begins to make a lot of sense. A coordinated approach with the help of an attorney and CPA would be very helpful in your situation!

Best of luck!

@Kyle Cortez - If parents are comfortable with it, they could just lend their credit to the business, but let student own it. So, student forms LLC, LLC gets property under contract, parents lend money and/or credit through a guarantee to LLC (and co-signor on note with lender) with promissory note and mortgage (will be second position behind commercial loan) back to parents, LLC closes on property, student manages property and makes payments to commercial lender and parents (which would rapidly build credit for him and the entity), and onward they go. Major drawback, if LLC is primary borrower and student is sole member, might get beat up by commercial lender on rate/terms.

Hi there @Stanley Yang - I would typically agree with your CPA, that active endeavors (i.e. flipping) should be held and operated separately from passive income assets (i.e. rentals) due to the varying degree of risk exposure with each. That said, a properly underwritten insurance policy and shore up your risk profile as well, or perhaps better, than splitting ownership into various entities and/or in your names personally. All that said, perhaps there's an accounting reason for the split too, I just wanted to comment on the liability aspects.

As for the process on how to change how title is held, I would absolutely not run the risk of doing this yourself. To take an old quote from Benjamin Franklin, an ounce of prevention is worth a pound of cure. In other words, spend a few hundred on an attorney/title company to avoid thousands if you inadvertently make a mistake.

Lastly, as for taking title as joint tenants or tenants in common, I virtually always recommend that title be held as tenants in common unless and until you're actually married. The reason for this is simple, if something happens to one of you, your interest in the property 'vanishes' into the other's interest, and therefore is not available to go to your loved ones. When you're married, your interests are more likely to aligned as to what disposition the disposition of your property would be in the event of something happening, at least presumably so anyhow.

Best of luck!

Hi @Adam Odom - Interesting topic, and one that I've dealt with regularly in estate planning matters. At its essence, an irrevocable trust agreement is a 'completed gift,' or to say it another way, the grantor/settlor has fully, finally and forever release ownership of the property they are transferring into the trust. Thus, recourse against the grantor/settlor is virtually impossible because they don't own, and are therefore not responsible for, trust liabilities (except in cases where the government wants a pound of flesh, of course). However, when dealing with a revocable trust, you have an 'incomplete gift,' that is to say that the grantor/settlor can, at any time, reverse the transaction and take back the trust property, and therefore remains liable for trust obligations. This is a major oversimplification, but I hope it helps clear up the issue to some degree!

@Karan Shah Yes, the other option is to take title as tenants in common. As to the accounting of paying all rent into a jointly owned account (keep in mind, bank accounts can also be tenants in common or joint tenants, or wholly owned by one with signatory authority to each, make sure you think through how you're going to want to do this) and then seeking capital gain exclusion down the road upon sale, I believe that could work, but I am not a CPA and do not routinely handle tax matters, so I would defer to a CPA on this issue.

Hi @Aaron Millis!

I too am a veteran, and utilized the GI to go to undergrad for business management/finance, and then on to law school. While this is a lot more school than most people want to go to, I find that it has been extremely helpful. I'm new to investing, but having practiced in real estate law, I have organically built a network of lenders, agents, investors, contractors and the like. I'm now in a position where I have the income to begin investing strongly, and the network of team members to make big things happen.

Everyone has a different path, but thought I'd share mine in the event it has any appeal to someone with 8 free years of schooling available!

Best of luck!