Dallas-Fort Worth Real Estate Investor Club

I am a new investor and am buying my first property for my newly created LLC.  The bank loan officer told me that they could not put the title in the name of the LLC only in my name.  She told me that I could then deed the property over to the LLC and that they would have no problem with that.  My agent thinks that the title company will have a problem with that.  Any advice on this problem.

Thand for your help Robin.

I would contact an attorney before doing anything else. You want to make sure that you understand and are comfortable with the risks... Personally I protect myself to the max, but other investors find that to be too difficult/expensive etc. it's ultimately up to you but supplement the advice of other investors with your own studies..I'll give you my (Texas) lawyers information if you're interested.

Good luck! 

Brian R. Baker, MBA

New England Housing Partners LLC / Texas Housing Partners LLC

Brian@texashousingpartners.com

Justin is right, insofar as specific behaviors need to happen in order to maintain the integrity of the protection an LLC provides.  I'm not a lawyer, but my understanding is that one good example of this is the need to keep corporate funds and personal funds separate--if you use LLC funds to pay personal expenses or vice versa, your LLC may not do much to protect you or your family's personal assets if you're sued.

I take a very different conclusion from this, however.  Rather than give up and say its too much effort, my non-legal recommendation is to learn what you need to do to maintain the integrity of the LLC, and then do it.

One lawyer specializing in asset protection said it best:  insurance and corporate asset protection are different things and a wise investor uses both to minimize exposure to severe financial risk.

Here are two links for more information:

   http://www.nolo.com/legal-encyclopedia/llc-basics-30163.html

   http://www.lonestarlandlaw.com/LLC-Formation_in_texas.html

David

PS:  I've never heard of a case where the number of owners in an LLC had any bearing on how effective the LLC was in offering asset protection.  Justin, can you please provide a reference so we can do more research?

In many states, the single member LLC has been attacked by the courts to the point that the LLC provides little or no protection. That isn't the case in Texas. Both the entity protection offered by an LLC and the charging order protection offered to the member or members of an LLC are still in valid. In fact, there is a proposed bill in the Texas legislature with its intent to codify the State of Texas's position on single member LLCs. Since the bill's intent is to just clarify an existing statute, as opposed to creating new law, my contact believes the bill has a great chance of becoming law. 

To the comment that LLC's are oversold, good insurance coverage certainly may lessen the chances of you not being personally sued; however, that insurance doesn't protect you if you are personally sued for some other reason,  a judgment is obtained against you and the creditor now wants to take your properties to satisfy the judgment. If those properties were in an LLC or series LLC, the creditor can only obtain a charging order, not ownership in the properties. 

Though I am an attorney, this is not meant as legal advice but only my opinion of the topic being discussed.