Featured News 2014 A Limited Liability Might Be Best For Your Property

A Limited Liability Might Be Best For Your Property

Property ownership comes with great risks and responsibilities. Especially when it deals with commercial property, a limited liability may be the best option to protect themselves from business debts incurred. A limited liability (LLC) means that the owners of the property have a limited personal liability for business debts that may be incurred.

In some business partnerships and transactions, their personal property may not be protected in the event that the business goes through bankruptcy, foreclosure, or a lawsuit. If any of these arise, their personal property may be at risk. In a limited liability, only the assets contained in the LLC would be affected. If a company owns multiple properties, it may be best to establish each of these locations as their own separate LLC to reduce liabilities. For example, if a company has two buildings under different LLC's, a person who sued for an accident occurring at one building would not be able to access the investments in the other property. If they are held under the same LLC, then all assets from the properties are fair game in a lawsuit.

Steps to Form a LLC

If a limited liability might be the best way to go with a commercial investment, there are some steps that must be taken to make this legal:

  1. Choose a business name that is not taken by another company in the state and be sure to end it with the LLC designator
  2. File the articles of organization with the states LLC filing office
  3. Develop an operating agreement to determine the rules for ownership and operation of the commercial property
  4. Obtain the license and permits necessary to begin doing business on that property
  5. Consult with a real estate attorney about retaining limited liability and how to keep this status as the business operates

Before determining whether or not to set property up as a LLC, check with the laws of your state and consult a real estate attorney. Making the decision to establish commercial property as limited liability can help prevent personal assets and other business holdings in a serious financial event.

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