House Owned by LLC
Ask the Real Estate Lawyer: Real Estate Law Q&A
REM #LAW 699
By Ilyce R. Glink and Samuel J. Tamkin
Summary: A reader is wondering about the liability of a home owned by an LLC. Ilyce and Sam explain the legalities of a home owned by a Limited Liability Corporation.
Q: Who owns a house when it is in a limited liability company and who would
be liable if the owner of the home is sued?
A: If a house is owned by a limited liability company (LLC), by definition, the owner is that company. In owning a house, an LLC would be no different that a corporation owning the home. Just like a person, an LLC or a corporation can hold title to a house and other sorts of real estate.
If title to the home is in the LLC, the LLC is responsible payment of any judgments owed, resulting from a lawsuit. If the LLC’s only asset is the home, the home might have to be sold to satisfy the judgment from the litigation or the owners of the LLC would have to come up with money to pay of the judgment.
If the judgment is worth more than the value of the house and if the members (owners) of the LLC have kept proper documentation for the company, the members should not be liable for any money owed above the value of the home.
On one issue, however, you need to be cautious: If the LLC borrowed money and
the members of the LLC signed personally for the loan, each member will still
owe the money back to the lender. The LLC will not shield the members from amounts
owed to the lender.
Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your Home Faster and For More Money In Any Market. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website www.thinkglink.com
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