My tenant wants to sue!!

[kingster555]

If I own a property, and the title is in the LLC, but the mortgage is in my name, can the tenant still sue me if little Johnny slips and falls off the roof on July 4th watching fire works?

Kingster can anything further be derived by rereading Daves original reply to a similar situation?
http://www.magicbullets.com/forum/showthread.php?t=763 Dan

[Terry (Houston)]

Well let me ask this back:

If you are the one answering the phone when someone wants to rent or buy.
You are the one who shows the property.
You are the one who signs the lease as a manager or agent.
You get the checks.
You follow up on late payments with a phone call.
You file the eviction.
You placed the ad.
You talk to them about rental increases.
and on
and on and on

Do you think you might be named?

With that said your LLC may give you some protection if you do things right to ensure you are treating it as a business. And I can't even go into that becasue it takes a good course to cover everything. Bill Bronchick has a great one at www.legalwiz.com.

The sad part is you can be sued for anything and named on things you have no control over. There is no telling what they will tell their lawyer :SM100: or what lawyer might track them down to file a law suit. :SM026:

The key is to have good liability insurance, follow the requirements of maintaining your business as a business and running the business with ethics.

Beyond that, you still might lose. :

But don't fret, July 4th is still a few months away. :SM020:

[Dan Auito]

If that isn't just about the most reasonable justification for the realities in this biz then I don't know what is? Terry I don't know which school of thought you graduated from but you must have a wall full of honors for using logic to analize and solve for problems! :praise:

[Pasquini]

Let me get some clarity on the original question. Are you asking if the tenant can sue, or can they sue you personally?

[kingster555]

I know he can sue, however can he get to me. My understanding from the responses is anyone can get to anyone if they try hard enough.

[brianb_cobbres]

I believe the question is does the LLC protect him from lawsuits or is he still potentially liable in the event of a lawsuit.

[Aldo]

Here's what I was told by an attorney who does entity work. If you ever owned a property in your own name and, later, deeded it to your entity (LLC, corp, partnership, trust, whatever), you're on the hook for a lawsuit. While the entity will help protect you from a non-aggressive attorney, the ambulance-chasers are going to find you. If a property was acquired by your entity, you have some protection, but with no guarantees. For that reason, I always recommend good insurance with not less that $1M umbrella coverage and no entity (for less than 10 rental units) unless the property(ies) are pre-1978. Older properties probably have lead paint and most insurers will not over lead paint claims.

[David Whisnant]

As an attorney, I have many friends who do premises liability law, and any good attorney is not hesitant to sue you because your property is in an entity. (The one exception might be where it is in a limited partnership due to taxation laws).

I can tell you that the absolute key, as mentioned in the previous post, is to have that insurance. I would recommend moving up above 1 mill as the additional cost is not that much. We carry 5 mill.

Having an entity will only get you so far, and "piercing the corporate veil" is not all that difficult if you ever intermingle corporate funds with private, or take any actions (which vary from state to state) that would indicate that you and the corporation/llc really are the same person.

Get that insurance! If you have the property in your individual name (not preferred), you can often cover rental units under your home umbrella policy. Just talk to your insurance agent.

As far as lead paint goes--no, most insurance companies will not cover it or any other toxic stuff. Make sure to have your renters sign a lead disclosure form stating that they understand that the dwelling might have lead paint if older than 78. And, be a good citizen and make sure to encapsulate any lead paint, especially on windows.

Hope this helps!

Dave Whisnant, JD

I get into all of this more in my course at:

http://www.4-real-estate-investing.com/course.html