| There are over 80 million lawsuits filed every year in | | | | sell or refinance that property until the lien is satisfied. |
| the United States making real estate investors and | | | | Your only choice as owner of the property will be to |
| landlords susceptible to major liability of being sued. | | | | pay off the lien. |
| How do you identify if you are an easy target for a | | | | Real estate investors have probably heard about |
| lawsuit? Is your real estate titled in your name? If so, | | | | holding properties in a limited liability company (LLC) |
| your assets may have a big bulls eye for attorneys. | | | | but aren't sure about the details of doing so. In order |
| Most real estate records are now online, so with a | | | | to protect their assets from a lawsuit, investors |
| quick search on Google or yahoo all of your real | | | | often choose to hold their real estate in LLCs. |
| estate holdings can be located at the touch of a | | | | Owning property in a Limited liability Company |
| button. With today's ability to find and identify | | | | provides greater asset protection than ownership in |
| individuals' property it is increasingly more important | | | | an individual name and greater flexibility that owing |
| to have your most valuable assets protected. | | | | property by a corporation. |
| Furthermore, on the same sites that you can identify | | | | If a Creditor gets a judgment lien against you, your |
| an individual's holdings you can find their mortgages | | | | LLC can still sell the property. Additionally, real estate |
| and the original principal balance at the time of sale. | | | | investors should have a separate LLC formation for |
| By subtracting the mortgage from the current | | | | each property they own to spread the risk. This |
| market value of their property you can quickly get a | | | | ensures that one property's liability will not affect |
| rough idea of how much equity they have and | | | | another. |
| whether they are worth suing. | | | | LLC's provide additional flexibility in asset protection |
| So although building equity, value accumulated by | | | | as they are not limited to owning real estate and can |
| market value increase, can be a real estate investor's | | | | be used to buy and sell stocks and bonds and own |
| best friend it also creates new liabilities risks that | | | | other financial instruments. An LLC can borrow and |
| need to be addressed. | | | | lend money. Because LLC's are considered |
| Another problem of having property in your name is | | | | pass-through entities by the IRS all the earnings pass |
| if a judgment is obtained against you, the judgment | | | | through to the owners. If the LLC has only one |
| may act as a lien on the property. If the judgment | | | | member, the IRS disregards the LLC as a taxable |
| lien is filed in the county in which you own property, | | | | entity. A single member LLC is not required to file |
| all of the real estate in that county will have a lien | | | | federal taxes. |
| attached to it. If a property has a lien, you may not | | | | |