Which insurance and legal entity for my project?

Question

Hello All,

i just purchased a couple of vacant parcels in California that i plan to build within 3 years.

The plan is to build 2 homes and sell one.

These are the only properties i have in the US, however i own substantial assets in Europe.

I carry the title in my name and have contracted a 1 million $ general liability insurance coverage for each lots for now. Builder's risk policy will be put in motion when the construction will start.

As far as asset protection, do you guys think it is worth transferring the deed into a LLC and take an additional 1 million $ umbrella policy or is it an overkill?

Thanks for the inputs

Jason Bott · Answer

Account Closed  $1M general liability is the limit most commonly used on similar developement sites.

As for adding an additional $1M in insurance limits, that is up to you risk tolerance.  If you are very conservative and are uncomfortable with any bit of risk, then pursue those options.

Account Closed · Answer

Yes i am aware of that FIRPTA; however it is not the biggest bad news for us french investors. Given the current fiscal agreements between both countries we are subject to the maximum french taxation rate on capital gains of 40%

Jo-Ann Lapin · Answer

I think you should speak to an authority in the insurance industry to get some sound advise.

Chet Mazur · Answer

CA being the sue happy place that it is, I would use some entity ro provide an additional liability shield.

Given these are you only real property, are you familiar w/ FIRPTA?