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Commercial real estate and limited liability companies

| Jun 30, 2020 | commercial real estate |

Making the decision to invest in real estate is a major undertaking. If this includes commercial properties, you may be able to tap into a lucrative industry, but you do need to take steps to protect yourself in case anything happens with the properties.

Some individuals opt to establish a limited liability company for the commercial real estate holdings. This can provide a barrier between those properties and your personal assets. While some people might not think this is necessary, you should understand how this might help you if you ever face a lawsuit because of the properties.

If there is ever a lawsuit placed in relation to the commercial properties, having them housed under an LLC can mean that your personal assets can’t be touched if the lawsuit is successful. For example, if someone slips on stairs and opts to pursue a personal injury claim, they’d sue the LLC instead of you as the building’s owner if they have reason to believe that the owner holds a portion of the liability for their injuries. If the claim is successful, the LLC would have to cover the damage award, but you wouldn’t have to liquidate your own assets.

There are some specific considerations when you’re going to house commercial real estate under an LLC. One of these is the funding, so make sure that you work with someone who is familiar with how to structure these arrangements. Typically, an LLC provides you with flexibility based on the articles of organization. Think about those carefully when you’re trying to determine whether you can make your plans a reality.