All Forum Posts by: Michael Gefvert

I've heard of this sort of arrangement for onsite handymen who get a rent reduction in exchange for being on call for maintenance issues.  But, having a tenant collect rent or resolve issues is a recipe for disaster.  It also might be illegal-- in my jurisdiction collecting rent money is real estate activity and can only be done by the property owner or someone acting under the supervision of a broker.

I think you may have reached a hasty conclusion about the final disposition of that security deposit.

You should consult a Nevada licensed real estate attorney on this question.  If you had asked me this question about an Ohio property, I would probably tell you to eat the cost of the $400 because you'll have a very difficult time proving that the tenant caused the damage without the ongoing help of the current owners and the current owners are unlikely to be helpful once this transaction closes.  The downside to losing a security deposit dispute well outweighs the benefit of keeping $400.  Nevada law may be (and likely is) different, but the cost/benefit analysis should be done with someone intimately familiar with Nevada law regarding security deposits.

Be sure that your decision not to rent to someone with a criminal record does not conflict with HUD guidance on the topic.

What would your plan be if you had to evict a tenant?

You can transfer the money in whatever way your agreement with the management company allows. Be sure not to commingle personal and business funds. Your LLC operating agreement should tell you when you can make distributions to get money out of the LLC and into your personal account. You may benefit from consulting an attorney to look over all of your paperwork.

You're not the owner of the property, the LLC you deeded it over to is. You are the owner of the LLC, this is a huge difference legally speaking and it's why you deeded over in the first place. That LLC should have a contract with the property management company enabling it to collect rents, contract for maintenance, obtain tenants, etc. I am assuming your property management company manages other rentals as well. If this isn't the case, this arrangement is unnecessarily complex as the LLC you deeded the property to could just do the management functions unless there is something quirky about LLCs in your state that make this arrangement necessary.

In my state you could show up as representative of the property management company to eviction court but you would also need a lawyer.  State law varies considerably on eviction processes, so consult a local attorney for advice on procedures where you are.

Lastly, I'll just say that anything you sign with respect to this property should make it clear that you are signing as an agent of the LLC, not as an individual.

I would go with whomever will show up to eviction court with the rent records. I would not put it in your personal name if you've already gone through the trouble of deeding it over to your LLC.

In addition to an accountant, you should consult an attorney on how to use your LLC to limit your personal liability which is really what it's for. The way you have it set up now according to your description, it isn't going to protect you if your tenant sues you.

How are you going about finding lawyers to interview?