All Forum Posts by: Jenifer Levini

@Brian P. can you site a few cases where a lawyer cracked through an LLC? My understanding is that this is extremely rare or never happens. Or maybe only where an LLC is formed by someone who does not really understand the use and power of an LLC.

If you bring your Operating Agreement stamped by your State Attorney General's office to the bank, they should open an account in the name of your LLC.

I use Bank of the West. Ive never heard of any bank not opening an account for an entity. You sign as the managing member or president of your entity. Banks know how to do this. Let them guide you.

Hi @J. Martin and all! I absolutely loved this summit. In addition to all the fabulous content, I appreciate the casualness of allowing people to flow from one room to another to fit their interests, and the liberal use of the "F" word peppered throughout the talks! I've been to lots of very formal conferences where we were all acting stuffy. That's BS. We are all here to make money. We admit it. People shared their successes and failures with kindness and generosity. And we laughed at each other's mistakes with compassion knowing that we have made that same mistake. That's true comradery. (However the f you spell it.)

The location was truly amazing. Every minute in that building felt special. And every time I walked outside, overlooking the lake, felt like I'd been transported to a European village.

The networking was fantastic.

J's introductions, little anecdotes, and ukulele playing were the icing on the casual cake. It make the whole event super friendly. If you have more speakers next time you'll need to replicate yourself so you can be in multiple places at once.

Here are the things i will do differently next time:

1. I'll study up who will be attending so I can promote my personal agenda by setting up private meetings in advance. Will there be an attendee guide or a way to see who else is going?

2. If I speak, I'll be more specific and less general about the money making aspects of my business. Other people did that really well!

3. I'll stay in a nicer hotel. The place I booked through Airbnb was a shitbag.

4. I'll bring more business cards.

As a point of feedback, some of the panels felt a bit unnecessary. Once those speakers gave their spiel, it didnt seem like there was a lot more info coming from grouping them in panels. 

I wish I could have heard all the talks! Ive read such positive feedback from the ones I missed. Maybe next year you can video them and produce a CD?

Jen

Hi @Elizabeth Schellhammer, I'm a lawyer. And Ive had clients with this exact problem. They were also very nervous after receiving the complaints and threats from tenants. You did a great job on your letter. 

Basically, you are not responsible for mold you did not know about. However, once you know about it you must remedy it ASAP. It's very important to find the source of the water and stop it. Then replace any moldy walls, floors, carpets...

Your lawyer can handle the communications to the tenants. They sound like they are jerks. 

Jen

Hi @Robert Grant Which lender did you use for those FICO-only loans to your LLC?

Jen

@Ben 

@Ben Williams youre right. My example oversimplified the bank's process of foreclosure. But I stand by my belief that the bank would consider this a breach of contract. The bank has a contract with a person. if that person transfers title to the entity, the due upon sale clause is triggered or the contract is breached. 

The payments are not coming from the same person. The new owner, the LLC is a different person or entity. The entity could get new members. and the original member could leave. This would be a sale completely hidden from the bank. if the entity stops paying taxes, or any number of reasons the bank could lose the ability to foreclose.

Any bank that let borrowers transfer title without redoing the loan docs would be foolish. 

BTW, i agree with @Steve Vaughan about separating unrelated businesses. However, in California the taxes on each LLC are at a minimum of $800/year and set up fees can be expensive. So in order to avoid those, and the legal fees, when businesses are small and have no assets I try to help people save money.

@Account Closed, Yes, youre right on. The system of layering entities and giving them ownership of different assets is a great way to protect assets in industries where there is likely to be lawsuits or other "disturbances." That is the way lawyers set up businesses in the marijuana industries, in banking industries, in investment industries, in utilities...

And just as I was explaining above, when money transactions happen between two of those entities, there is a paper trail (contracts, loan notes...) and NEVER any gifts (AKA contributions) that could appear as co-mingling funds.

And, its definitely an interesting idea to set up real estate holding companies as layered entities. I set up mine that way to give investors different streams of income from the appreciation and the rental income, and to protect each asset from the other's liabilities.

@Michael McDevitt I'm a little bit surprised at your answer. I'm an attorney and one of the things that is most important to maintain the integrity of separate entities is to keep finances from co-mingling. this prevents potential litigants from piercing the corporate veil. In your answer when one LLC contributes to the other without any contract, such as a note, this would appear as sharing funds which would definitely contribute to the argument that they are not separate entities.

There could be other ways besides a loan. One entity could be a member of the other. Embedding is a pretty sophisticated way to manage finances that allows this sort of contributions, depending on the operating agreement. 

However, I'd imagine that a loan could have other tax benefits.

Hi @Mohan Dag, the answer to your question depends on a couple of things. (I'm an attorney so that is the standard answer to all questions.) First it depends on the value of your consulting business. One of the main reasons people create a separate entity (LLC) is to shield their assets. If the consulting business has a high value then it becomes vulnerable if its held in the same LLC. For example, if a plumber comes to your multifamily and messes up the gas line and the place explodes. Then all the tenants sue the LLC, the asset they will go after is the consulting business and its bank accounts and whatever else it has of value. Now if the consulting business has little value, then there isnt much to lose. But if it is worth millions, then you could lose it all.

The second consideration is the operating agreement and members. If youre the only member then you can simply rewrite the operating agreement to incorporate the new asset and the role in managing it. If there are multiple members then you'll have to follow the voting rules in the operating agreement to make the decision.

Lastly, the bank that is making your loan may have a policy. Its probably a good idea to check with them.

Jen