Can a rental lease be under the management company name?

Question

Hi, I'm about to close on a 2 family rental property. Since we're not buying it under an LLC but our own names, I was wondering if ot makes sense to start an LLC for the purpose of managing said property, and have the leases be signed with the LLC instead of with us. I'm trying to gain some anonymity with the tenants.

Thanks,

Ariel

Thanks,

Ariel

Ryan Murdock · Answer

@Ariel Li

I'm in a different state than you but I always listed the property owner as the lessor followed by the management company, even in cases where both the owner and the PM were really just my LLC's.  It looked something like:

This LEASE AGREEMENT (hereinafter referred to as "Agreement") made and entered into on this 1st day of March 2019 by and between:

PROPERTY OWNER LLC

By: MANAGEMENT COMPANY LLC (its authorized agent)

whose mailing address is PO Box 123, Anywhere, ME, 12345 (hereinafter referred to as "Landlord")

and

Jim Smith and Jane Smith (herein collectively referred to as "Tenant")

The names were never really an issue for me until we went to court for an eviction hearing. I always felt more comfortable not getting tossed on a technicality if I had the property owner actually named on the lease along with the authorized PM. Every state is different so this may be a non-issue in MA. I'd consult someone with localized knowledge here.

Ariel Lisogorsky · Answer

@Thomas S.

@Matt Michaelson

This is not a question of pride, but more of the practical side. One of the partners is living on the property and I don't want the tenants to take advantage of it. I'm trying to prevent a problem before it happens, and was looking for a more technical answer.

Thanks!

Trent Honea · Answer

I am not a lawyer so I cannot give legal advice.  That said, I've been reading a lot on here about holding property in Land Trust, two-company structures, and similar strategies to enhance anonymity.  From what I've read, it's not only possible but fairly common.  But it can get complicated and you can create more problems that you solve if done wrong, so you should definitely consult a lawyer licensed in your state.  It's not really a DYI task.

When you turn management over to a property manager, as I have done a few times, this is exactly what they do.  They send a lease amendment with their company and contact information as the payee, but my name still appears as the landlord/owner so it reduces the direct contact, but I'm still identified.  If the property were held in an entity name rather than personally, that would appear on the lease, so you get the result you are seeking.  All of that is separate from discussing asset protection, which should be considered as well.  My suggestion is read and research before you decide.  Nolo.com and other sites have very good articles on the processes.  Google for "Land Trust", "two-company structure", "two-company LLC", etc. and you should get some interesting results.

Here's a BP discussion to start with:  https://www.biggerpockets.com/forums/51/topics/147...

Happy Investing!

Thomas S. · Answer

You can do it however it is a mistake. You should be upfront with your tenants that you are the owner and manager. Hiding is not a responsible beginning to a business relationship. Take pride in ownership and let them know you are the owner.

Ariel Lisogorsky · Answer

@Trent Honea

Thanks Trent this is extremely helpful.

Ariel Lisogorsky · Answer

@Ryan Murdock, thanks for the reply. I will check locally. We don't have the property under an LLC so I prefer to avoid putting my name of the lease.

Al Williamson · Answer

Hello Ariel,

LLC are excellent for holding property.

Natalie Schanne · Answer

@Ariel Li - Your name and your partners name as the owners is in the public record immediately after you buy the house. I’m not sure how a lease with an LLC helps you except by initially disguising your ownership interest. You (and your tenants) WILL receive mail at the new house with your personal name on it (geico ads, etc.) because mailing companies mail to the owners of record regardless of if you’re renting it out. So if you don’t think they’ll figure it out, you are wrong and they will.

If you bought it in your LLC name, that’s a different story. Mail to your LLC would go to the house. Some states can disguise who owns an LLC but some states it’s a very easy online lookup too.

I don’t know the legalities of your LLC as your agent. In order for a lease to be valid, it needs to be between the OWNER and the Resident, potentially executed by your property manager/designated agent, You don’t want to write a non valid lease for some fake privacy you won’t get anyway.

Ariel Lisogorsky · Answer

@Thomas S. ... Still, looking for a more technical answer, like the one

@Ryan Murdock provided. As in, is it legal, do people do it, how common is it.

Thanks anyway.

Thomas S. · Answer

You are not preventing a problem you are creating a problem. Tenants will find out and when they do the relationship will be negatively impacted. If your partner is weak and not capable of managing a landlord tenant relationship they should not be living in the property. Tenants can not take advantage of a situation unless your partner allows it. Tell your partner to step up and take responsibility for managing the property.

Owners that are not cut out for the business should not be in business. Landlord up or find a new partner that can manage the responsibility.

Can a rental lease be under the management company name?

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