Q&A Part 5-Real Estate Investors and Protecting Themselves

In the last of our question and answer series, Bratton Scott attorney, Matt Zonies, answers the question that many real estate investors have in this market:

What can real estate investors do to protect themselves against creditors and potential plaintiffs?

As many people know, real estate is a risky venture.  Not only is the market uncertain, but the owner of an income producing property is constantly exposed to potential claims by tenants and creditors, both personal and business.  Most real estate investors will take the first step and place any investment properties into a separate entity, typically an LLC, for the purpose of protecting their personal assets from any investment-related claims.  What many investors overlook, however, is the liability this creates between the investment properties themselves.  By holding all properties in the same entity, the creditor of any one property has access to the combined equity of all the properties.

 

An attorney familiar with debtor-creditor laws can help to protect against this by using different entities and financing structures to isolate the liability created by each individual property.  As is typically the case, having protections in place can help to avoid large losses in the future. To learn more about protecting yourself, contact Bratton Scott at 856-857-6000.

If  you have a legal question, post a comment or contact us through the website and see your answer appear on our blog.