All Forum Posts by: Trevor Justice

I just replaced my 19 year old gas range with a new one, only to realize that its griddle & grates are cast iron. If not cleaned well, dried, and oiled regularly, cast iron can rust. If in a lease, tenants agree to properly care for the griddle & grates, but then they don't, can they still argue that rust is "normal wear and tear"? Note that I'm in Oakland CA where judges are known to side with tenants.

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Quote from @Matthew McNeil:

As @Chris Seveney alluded to with his questions, there are a few disconnects in your narrative. You've not provided enough context to provide a sufficient answer other than us offering some thoughts based on assumption. The WY LLC issue is a concern. Did you also register it in CA, which will be required. Have you considered the WY "look back" time frame if sued? That limits protection. Did you buy the asset in the name of the LLC already? If it was a Conventional loan then you're legally allowed to transfer the asset as long and the members of the receiving LLC are the same as those identified on the loan. Is the transfer issue your concern?

That whole WY Holding Company LLC is - in my opinion - not worth the money spent, and unless it was done carefully and diligently (which a lot of people don't understand all the nuances involved) then its a waste of time.

Thanks Matthew! My LLC structure was set up by Anderson Advisors, and I'm quite sure they are experts on this type of thing. Here's my understanding... Because my properties are in CA, they must be owned by a CA LLC. However, the member/manager of that LLC can be a WY LLC, and that one doesn't need to be registered in CA.

When my partner and I bought the apartment building, my living trust went on title for my 20%. But as you know, this offers no asset protection or corporate veil.

I'm not familiar with the "look back" timeframe. Would that come into play since my 20% interest in the apartment building was owned by me personally before I deed that interest to an LLC? Feel free to elaborate or link me to a page explaining more about it!

The loan is a commercial investment-property loan with Luther Burbank, not a FNMA loan.

You said I'm legally allowed to transfer. I've read that this is true when transferring property to a trust for estate planning purposes. But I transferred from a trust to an LLC.

Are you still saying this is still legally allowed? If so, are also saying that my lender cannot charge a fee to re-underwrite a loan, when a living trust deeds its interest to a new owner/borrower, which is an LLC?

Thanks a million!

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Quote from @Chris Seveney:

@Trevor Justice

Depends on asset type and many other factors

How many units are in the building you own? How much of it do you own? What other assets do you have ?(you mention they could take this apartment building if sued, well whether it's in a LLC or your name they can still take the building whichever entity it's in…

Who manages the building?

How much is your insurance policy?

Hi and thanks for your reply Chris! The building I mentioned has 24 units and I own 20%. I'm also a 90% partner in a duplex, and a 100% owner of a triplex. Plus I have some money in a real estate fund and some in Ameritrade. Total net worth is between $1M and $2M.

The 24-unit building and the duplex each have $2M of liability coverage, and both are managed by my partner -- someone with decades of experience owning/managing rentals in San Francisco.

Because I live in my triplex and also have short-term rentals, conventional insurers like Farmer's and State Farm won't insure it. So for this triplex, I'm with Foremost. $1M of liability coverage is the most they will give me, and that's what I have.

I'm looking into umbrella liability but it's not so simple. The broker who represents Foremost said none of his insurers would expand coverage on the 24-unit or the duplex. State Farm says I'd need both a personal umbrella (expanding coverage on my triplex, plus any suits against me personally) PLUS a commercial umbrella to cover the 24-unit and the duplex.

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A 3-year tenant is vacating. I had just repainted his apartment before he moved in. Now a couple of walls need to be repainted, and others might just need touching up. In California, can I charge the tenant for this or not? Thanks!

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Oakland, California

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.

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All Forum Posts by: Trevor Justice

Trevor Justice has started 3 posts and replied 5 times.

Post: Are careless tenants responsible if the cast iron griddle & grates (on stove) rust?

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

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

Post: Can you charge a 3-year tenant for repainting when they vacate?

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