All Forum Posts by: Bienes Raices

A woman called and made an appointment to come visit the house. I was there at the scheduled time, but they got lost twice and had to call me to get directions to find the place. They finally arrived in a white van.

When they arrived they were full of ideas about painting one of the bedrooms, replacing the range with their own range which they had in storage. I told them they couldn't do these things and they seemed peeved.

They decided to apply anyway, and were filling the app out on the spot, and ran into trouble because they couldn't remember the last name of their previous landlord (they were currently living "with family"). I told them I needed that and they decided to go back out to the van because maybe they could find the information there.

When they returned from the van, they managed to track dog doo into the house, and it began to smell. By this time I was getting p*ssed because I had another group scheduled to visit right after them.

Anyway, I ran the application and the man had several convictions and some of the woman's rental info did not check out, so the rest is history...

Thanks everyone. I think I'm not going to allow them at this one.

I don't have it because all of my houses are in Zone X (low to moderate). I'm taking a bit of a risk, I know. The problem would be if a tropical storm stalled over this area and created rising waters.

Here is an interesting (well, to us real estate geeks, anyway) article on the subject:

http://www.insuranceforinvestors.com/2011/08/the-problem-of-purchasing-insurance-in-the-name-of-an-llc/

Well I hope you do not end up paying more for that insurance policy or being trapped at that carrier forever just because they are are the only one who will place the LLC's name as the primary on the policy...

Has anyone verified that this is a real LLC veil-piercing issue, that it has actually been a successful tactic in court?

I've been told you can't put multiple LLCs under one umbrella--if you want to do the umbrella you need to do a separate one over each LLC. Which is why I don't bother with an umbrella on my one LLC'd property.

You may be overthinking the insurance issue. If the carriers' rules state that the person must be the primary and the LLC Additional Insured, then large numbers of landlords in your state must be doing it this way. I doubt a judge would allow the veil to be pierced because of a standard practice in the insurance industry in your state. I think sloppy business practices would be a more likely avenue of piercing, which is why you should not do one bank account for more than one LLC.

Since you are already working with an attorney, maybe you should ask him or her about the veil piercing/additional insured issue. Most of us are not in Colorado so our advice may not apply to your situation.

@Sam Leon

Is this property in an HOA or an upscale community where lawn appearance is important/mandatory?

For future rentals, if they're in blue collar or "average" areas, I wouldn't invest money in sod unless the lawn is completely barren. In my experience so far, tenants don't knock themselves out caring for the lawn, and the applicants are far more interested in the square footage of the house (and kitchen cabinets) than lawn appearance.

If you have bare spots in some parts of the lawn you could try sprinking Bermuda grass seeds and then hand watering.

Lola Brin

I have mine set up that way with the insurance (my name as the primary insured, LLC listed as additional insured). My impression is that a number of others on this forum do this as well. Maybe I'm whistling past the graveyard, but my impression is that the most important veil-piercing issues are 1) not using LLC bank account for personal expenses 2) signing documents properly 3) not using LLC to commit fraud

When you say "individual LLC" are you referring to a single member LLC or an insurance policy that is personal rather than commercial?

Lola,

For what it's worth, an employee at IRS told me that the IRS treatment of the LLC as a disregarded entity occurs at the federal level, so it doesn't affect the veil piercing/charging order protection issue which takes place at the state court level.

Sam Leon

I give the tenants the option of doing the lawnwork themselves or being charged at the market rate to have someone come out a couple times a month to do it (so far no one has opted for the latter).

I haven't put new sod in (and I don't have sprinkler systems) so I don't worry too much about the irrigation, although I specify in the least that they are responsible for the irrigation. I have bahiagrass (plus some weeds) at all my rentals, and while it doesn't look as good as some of the higher end grasses, it always seems to come back to life even if neglected.