All Forum Posts by: Timothy Murphy III
Timothy Murphy III has started 6 posts and replied 678 times.
Post: What state should I set up my LLC in?

- Real Estate Broker
- Cleveland, OH
- Posts 771
- Votes 252
Ohio law is also very business friendly when it comes to the corporate veil of LLCs or other incorporated entities. I've defended the corporate veil in Ohio before at trial, where a plaintiff attempted to pierce a business owner's corporate veil and pursue the owner's personal assets. Absent fraud, or heavy co-mingling of funds to the point where there no meaningful distinction between the business and the owner, the law dictates that the corporate veil holds up.
Post: Help finding an attorney

- Real Estate Broker
- Cleveland, OH
- Posts 771
- Votes 252
You can PM me or email the details. I can either assist you or provide a referral.
Post: Cleveland 44128 Lee-Miles Area?

- Real Estate Broker
- Cleveland, OH
- Posts 771
- Votes 252
I'd echo the general sentiment of the other posts in this thread.... That neighborhood is one I would consider C to D caliber. The areas near the suburban borders trend more towards the C end of the spectrum, where the areas deeper into the city trend more towards the D range.
Post: Can an LLC formed in one state buy property in another state?

- Real Estate Broker
- Cleveland, OH
- Posts 771
- Votes 252
Typically yes you can do this. You can either form an LLC in the state where you're investing, or you can register the foreign (meaning out of state) LLC as a foreign entity with the state where you're investing. At least for Ohio, it typically makes more sense to form an Ohio LLC, but plenty of my clients use LLCs from other states for Ohio holdings too.
Post: Property taxes when buying property under LLC in Cleveland

- Real Estate Broker
- Cleveland, OH
- Posts 771
- Votes 252
Quote from @Alejandro A.:
Hi group, does property tax stay the same when purchasing a property in Cleveland under an LLC from an individual owner or does it fluctuate and how?
Thanks in advance.
Some more creative title agents have a trick they can use, sometimes called a "swap and drop". Basically they xfer the property into a newly created LLC (so you can be sure it has no pre-existing liabilities, debts, etc.) which is owned by the seller. The xfer into the LLC is an exempt transaction that doesn't pay conveyance tax or trigger a revaluation of tax assessed value. Next, the fresh LLC that owns the property is transferred from the old owner to the new owner. This doesn't protect you from new tax valuations forever, but if we're talking larger value properties with an assessed value well below the new sales price, it can sometimes be worth the extra transaction costs up front to avoid increased property taxes for a little while.
Post: Property taxes when buying property under LLC in Cleveland

- Real Estate Broker
- Cleveland, OH
- Posts 771
- Votes 252
Quote from @Alan Bostick:
My father-in-law just purchased a home that was involved with Homestead Reduction. The previous owners had it for 10 years but did not qualify for the reduction, but the owners before them did. The county didn’t remove the Homestead Reduction until my father in law purchased it and is now being told he is responsible for the last 10 years of unpaid (improperly reduced) taxes to the tune of some 12k. He is actively trying to fight that now.
Sounds like an issue to take to the title company. If taxes were to be prorated to the time of purchase, anything incurred prior to title transfer should be the old owner's responsibility. If title didn't catch this or account for it, it sounds like their problem to correct between themselves and the old owner.
Post: Security deposit and sale of property

- Real Estate Broker
- Cleveland, OH
- Posts 771
- Votes 252
Usually any deposits xfer to the new owner at closing (typically through a credit on the closing statement). Most deals use standard boilerplate purchase agreements that contain this language, but it's possible to use different terms and handle the xfer of a deposit differently. If the previous landlord didn't xfer the deposit, he's supposed to have given the tenant written notice of any deductions against the deposit. Look at your closing statement to see if a credit for the deposit is on there as a line item.
Post: Lawyer Suggestions for Partnership Agreement - OHIO

- Real Estate Broker
- Cleveland, OH
- Posts 771
- Votes 252
In some cases I take this sort of work in. In others, I refer to a colleague of mine. PM me if you'd like the details and contact info.
Post: Water/sewage Fee on Top of Rent

- Real Estate Broker
- Cleveland, OH
- Posts 771
- Votes 252
Quote from @David Terbeek:
This is normal in the Cleveland market, very few muti-families are separately metered. I think the PM is correct, adjust your rent accordingly. Generally, under Ohio law and specifically in local court interpretations, you must have a separate meter to bill the utility to the resident. I do know that some landlords use the fixed charge amount concept for the water/sewer but it is unclear in case law how well that holds up because there is no meter reading to justify the charge. Why take the chance, just add to the rent.
Post: Seller can stay 30 days?

- Real Estate Broker
- Cleveland, OH
- Posts 771
- Votes 252
Very dangerous IMO, as if the seller doesn't leave when agreed, you're now an accidental landlord. It's not typically caused because the seller planned to screw you all along, but often their other housing doesn't come through as expected and it's easiest for them to just stay until they figure it out.
I helped a colleague of mine buy a home for his family last summer and the seller asked for this because she was using some of the proceeds from the sale of her home to close on her new condo. My colleague was working on a case where this very thing happened so he was keenly aware of the risks. The way we dealt with it was by giving the seller X number of days of possession after closing, rent free, with a substantial per day charge if she did not vacate by the agreed date. This was secured by having a portion of her sales proceeds held in escrow and not to be released to her until possession was granted to the buyer. This ensured she has proper motivation to actually leave when she agreed and it made sure the buyer has security in the event something went wrong and she was unable to leave as agreed.