All Forum Posts by: Mitchell Zoll

Talk to a real estate lawyer in Pennsylvania, and maybe one lawyer in Florida where the property is located. Don't set up a web of LLCs because of internet advice.  Don't make it more complicated than it has to be. 

Who is meeting with the attorney and who is the attorney's client?  The attorney can't give advice to 5 people at once. Contract terms will always benefit one person or another, and the attorney is under a fiduciary duty to advise their client. If they don't know who that is, they can't give final recommendations.  And if the client is the entity, the individuals have to make these decisions and the attorney can't recommend one path over another. 

Choose one person to be the designated representative to meet with the attorney - alone - to make these decisions on behalf of the group.  Can't choose one person? Then you already have a problem with control (and you can see why you aren't getting final advice). 

Best for folks to consult with a lawyer in their state who has litigated premises liability cases and understands the legal options that folks discuss on these boards (ask for actual court cases they have been in, not articles they have read). But as you see from other discussions, a Series isn't always recognized by financial institutions and tile companies unless registered, and registering a series is the same cost as filing a new entity in some states. There are also issues with discovery in litigated matters relating to a series that are not present if the entities are entirely separate (by separate filing, name, etc). If your goal is to separate entities and liabilities, it is worth considering the legal implications of separate LLCs versus a Series. 

@Damon Kellar Agree with Don that you are overcomplicating it. I can't agree with the Series. That is just more complication. You don't get anything for it in a legal context, and the accounting becomes a nightmare. For estate planning purpose, it is smart to have a trust. Meet with a lawyer to discuss how to create the trust and how it operates. For the properties, you can own in the name of a trust, or own in an LLC that is owned by the Trust. But before you do a complicated web of holding and operating companies, read your state statutes and local ordinances. You might not be avoiding liability... and instead you are just creating more defendants. Read the local case law addressing who is liable for premises liability matters. Both in terms of LLCs (series or otherwise) and defendants.... more is not better.

Just chiming in to say that I think it is good for investors to see how the lawyers above are seeing this problem differently. Good to see the various advice as a learning opportunity! 

While I don't dispute that someone told @Clint Coons that story.... I don't believe it happened as the speaker says it did. I'd be interested to see the pleadings if it did but the fact that the speaker told Clint it was an "unfiled petition" makes me suspect. But even if it did, that's a "bad story makes bad advice" scenario. You have to understand the way insurance limits, civil litigation, and Stowars demands work to know that the threat is empty at best.

Please don't take internet advice as legal advice. Use these posts to become an educated consumer, and then sit down with an attorney to ask questions. Talk to an attorney who has  actually handled premises liability claims in litigation (and ask for the pleadings - they are public record). Find someone who has tested these theories before a judge, and ask what arguments opposing counsel made. 

Before you start with a bunch of LLCs work to understand the basics of mortgages, statutory liability (read the statutes and ordinances in your area!) as well as litigation, discovery, judgments, and insurance.

Then choose your insurance and entity structure.

Changing the company agreement (operating agreement) is the result, it’s not the way the ownership is transferred. I see so many folks starting businesses then not treating it like a business. Please go to a lawyer who has litigated these issues (not one who just has a notebook of nested entities to sell you) and they can show you what you need to do this right. Don’t start a business to avoid liability then do things half way and create liability in the future.

Start with the partnership agreement/operating agreement.  If you are in different states from the property, and possibly with the other members, there are significant jurisdiction questions that you need someone to review. if you can't find that agreement contact the lawyer who drafted it for you all for a copy. 

Please talk with a lawyer about setting this up correctly, whether you use his existing LLC or create a new one. There are a bunch of issues that you need to address now with your Company Agreement - even MORE so because you are family - Not less.

As for how to do it if you are going to use his LLC. Think of it like he owns 100 out of 100 "shares" of Dell stock. You want to now own 10 "shares" and he owns 90. How do those shares get to you? What paperwork do you show the IRS or bank or other members in the future to show who owns what, and when that ownership started?

It's the same for his company. Membership Interest (LLC) = stock (Corp). His LLC = Dell. It's not different because you are family. It's not different because he hasn't done much with it (although the price of the interests you get will be near zero!)

Amending the Company Agreement is part of the process because it documents who owns what inside the company. But that's the end of the process.

You need someone who understands the law where the property is located.  Assuming that's California, you want a California lawyer. From there ... a good/experienced lawyer is more important than someone close to the property. But if the property is in Lodi and the lawyer you get is from San Diego, an opposing lawyer will know you are going to have to change lawyers or pay the San Diego lawyer a BUNCH of money to litigate where the property is located. 

You can possibly use the lawyer you used to create the entity and draft the entity documents, but be careful to know who they represent (you or the company) and to make sure it won't create a conflict of interest with the other member of the LLC.

If you have reached out and there is no response - spend your energy now getting educated on your options and how best to move forward. 

This is a civil litigation matter so start with an attorney who handles civil litigation. Before you make a move gather your documents, emails, meeting minutes etc and meet with them to find out what you can do and what the risks might be. Referrals from friends who have been in this situation would be best (just don’t involve them in this dispute). If you can’t get a referral, check your local bar association to see who is part of the civil litigation section. Review their websites and reviews to find one who handles partnership/business disputes.