should we establish an out-of-state LLC?

5 Replies

Hi! My husband and I are buying several properties in Oklahoma. We live in Florida (but have lots of family in Oklahoma). We want to put the properties into an LLC, as we both have high-liability jobs (physicians). Does the LLC have to be established in Oklahoma, or can we use a Florida LLC? Thanks!

Do your homework. The LLC doesn't necessarily protect the owners from liability. Avoid liability issues by keeping your property in good condition, renting to quality tenants, get a good insurance policy, and an adequate umbrella policy.

In general is better to open an LLC in the State where your property is located. There are some exceptions to it.

The LLC has to objectives: to protect you from inside liability (you can loose everything inside your property, but it won't reach your own assets out of the LLC).

to protect you from outside liability. If one of your patient sues you, he will only be able to get a charging order against your LLC that will in practice won't let him get anything if you don't distribute any money out of it.

The first protection is the same in all states. However, the outside protection varies depending on the state. Only a few states have the charging order as sole remedy, while other will let your creditor foreclose your LLC. If the state where your property is has good protecting statute, then just open the LLC there. If not, you would probably need to have this LLC owned by an out of state holding LLC where the state statutes are more protective.

Beth,

Lots of good input, but one thing that has not been mentioned.

You can register your current Florida LLC to do business in the state of Oklahoma by following a specific statutory procedure. This is often the simplest, most direct solution. However, you would want to weight the costs and benefits of doing so. Depending on your portfolio and unique situation, a separate LLC might be best.

(Obligatory disclaimer: I'm an Oklahoma attorney, but not your attorney.)

Sincerely,

Ryan

@Beth Walford I advise against using a Florida LLC in Oklahoma. That would be an odd duck. The state with the best and most flexible and well understood corporate laws (which embraces LLC laws) is Delaware. Oklahoma courts have been dealing with Delaware entities for decades. My advice is to set up a Delaware LLC. Or, better yet, a Delaware Series LLC (with one property per Series). Richard S. McLain, Attorney at Law and real estate investor.