BiggerPockets

I'm a newbie investor and heard a rehab gal Robyn Thompson vehemently state one time that she would never buy materials for her renovations because it would open her up to being considered as a GC/employer if ever sued by an injured worker and another investor she knew had their wealth wiped out as a consequence of this. Does anybody here have any great insight into this/options to mitigate such liability? Before the suggestion gets made of placing investment properties in separate land trusts or separate LLCs...One difficult consideration Memphis imposes is something called Hall tax which imposes a 6% tax on the investment proceeds of entities like LLCs & trusts but not properties held by an individual (If I understood a lawyer correctly).

http://en.wikipedia.org/wiki/Hall_income_tax

So are there insurance offerings that address this liability and a person would just buy sufficient insurance coverage? Your insight is most appreciated!

Totally helpful J Scott. Thank you!

Altin, thanks for the reaffirmation! I know sometimes people, even lawyers, get it wrong ;)

@Daniel L. - Your profile says you are an investor in Texas, why the question concern about investing in Memphis? If you are wanting to do projects in Memphis, but live in Texas, then the Hall Tax does not apply to you unless you plan on living in Memphis while doing your projects and that amounts to greater than 6 months of the year. Otherwise, it does not apply to you.

Who purchases the materials is a non issue, it is all about the contract between you, the GC and the subs. If you use unlicensed, uninsured subs and don't have a contract... you are asking for major problems. Always use a contract (can borrow from the AGC) and have the sub provide you with a certificate of insurance for general liability, auto and workers' comp. The certificate needs to name you as additional insured with primary wording and a waiver of Subrogation.