who should sign the lease agreement and utilities ?

Question

Hello BiggerPocketorsMy wife and I just placed an offer on a townhouse, and we're pretty confident that the seller will accept it. We are also in the process of creating an LLC in the state where the property is located and a holding LLC in Wyoming so we can get the full package (asset and liability protection, anonymity, and mitigation of taxes). Since it's our first investment property, we are planning to manage it ourselves. So the question is: Who signs the lease agreement, the utility agreement "if not included it in rent," or even landLard insurance? Is it my wife and I or the LLC company? Assuming we've already set them up before closing, I hope to get some informative information. Thank you.

Nathan Gesner · Answer

Yes, all the documents should be signed as the LLC with your LLC title (Manager, Member, Owner, etc.)

Some people try to hide that the own the property. I disagree with that tactic. It's dishonest, you are likely to be found out and the tenant may lose respect for you, and it doesn't provide you with any additional protection.

I recommend honesty and strong boundaries.

Bruce Woodruff · Answer

You will sign it with your title from the LLC.

I.E., Shawn Augusti, Managing Officer, ACME Properties LLC

Bill B. · Answer

No tax savings and… If you’re sued there’s zero privacy, especially if you’re managing the property. And if you’re self managing there’s probably no asset protection.

Are you sure you’re not being sold a bill of goods? Especially if the seller of such goods mentioned tax savings.

Please try to find one person on BP who was saved by an LLC or only lost their property because they had an LLC.

Ask your insurance agent about an umbrella policy.

Russell Brazil · Answer

FYI, the LLC wont save you any taxes.

Colleen F. · Answer

@Shawn D Augusti you sign as an LLC representative but why not just double up on your liability insurance.  Insurance may cost more as an LLC and you need to file likely as a foreign entity in the state your property is in which costs.

Jerry W. · Answer

@Shawn D Augusti, welcome to BP.  As to the opinions voiced here that any attorney can easily pierce any LLC it is blatantly not true.  LLC s are not perfect, and how you operate them is important, but the authorizing statutes list protection and courts are obligated to follow those statutes.  You can do things to step out of their protection.  In my state I have seen many cases where judges ruled against piercing the corporate veil of an LLC even in very high dollar cases.  In fact in my state LLCs are held to a lower standard of keeping up minutes and other detail oriented attacks that do not work harm on the plaintiff, than they do against corporations.  Even my recent CLE classes show that LLCs are still working most of the time.  They are cheap and do provide extra protection.  There are drawbacks.  In my experience it is harder to get a loan using an LLC and when you do the rate is usually about 1% higher interest rate.  Next there is extra work to running an LLC.  You should have at least annual meetings, but probably a meeting for every major decision, like buying real estate.  You have annual filing costs that cost depends upon the individual state.  Not all states provide the same level of protection, and some treat single member LLCs different from multimember LLCs.  I have seen many lawsuits against members or owners of LLCs dismissed in summary judgement as there was no showing of a good reason to pierce the veil, and I have seen judges strike down discovery requests wanting information on who owners are and what they own as being "fishing expeditions" that noting to do with liability.  In my opinion one of the biggest dangers in having members named is the pressure of a being named makes them more likely to settle than if the suit is only against the LLC.  Lawsuits can really stress people out.

Michael Smythe · Answer

Bruse is correct.

ne warning about LLC's though - you want it to HIDE your identity.

So, don't include your names, initials, etc, and don't use your personal address.

John Morgan · Answer

There are no tax benefits for having an LLC when filing. And any attorney can pierce an LLC fairly easily. So save yourself the hassle of getting one and hiding behind it. Just get extra liability of around a million and you’ll be fine.

Shawn D Augusti · Answer

thank you guys for all the advise. I will def. look into the tax savings part. also i was thinking of presenting myself to the tenant as the "property manager" and now the "own who manages the property"

Jay Thomas · Answer

Ideally, the LLC should sign the lease agreement as the property's legal owner, offering the desired liability protection and anonymity benefits. However, exceptions may arise, with some landlords insisting on individual names, particularly for newly formed LLCs. In such instances, consider incorporating a clause stating that you are authorized representatives of the LLC. Regarding utility agreements, the approach varies depending on the provider, some accepting the LLC's name while others may require individual names. It is advisable to contact utility providers for clarification. For landlord insurance, issuing the policy in the LLC's name is recommended to maximize protection and secure liability coverage for the LLC in property-related claims.

who should sign the lease agreement and utilities ?

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