All Forum Posts by: Terry Portier

I’d like to hear at this point all the DYI liability law suits where the REI said they can estimate and take legal responsibility for a project like this. And then we have the REIs that expect us to do free estimate on top of the risk, I say to you really?

Lets continue with the build and look at legal liability shall we? :)

Is it the homeowner, us as an LLC, a sub, an REI? when things go wrong? Whom is to blame? I mean legally, not personal opinions..Whom is to blame?

If you don't know the answers to those question hire a local companiy based GC.

Engineers or contractors feel free to ask any questions on this design/build.

The soil when we got down to frost line was interesting on this design that is why I opted to from 4- 5K PSI concrete.

Liability or construction law the design/build liability law falls on us or in the case of a REI that manages subs that may not know the construction law, design load requirements per residential and national code and contract law requirements them.

Got the footing and floor done, 5000 LB mix.

Storm shelter,

Walls,

Well be tearing out the lower roof to access the upstairs existing floor which is common to our new wall height. The upper windows will come out and that wall.

Garage door rough ,

We are the GC and Engineer, manage subs. We'll be dropping in some cool looking trusses next stay tuned :)

This is how a TX attorney said he sets them up on ALI’s blog: http://www.biggerpockets.com/forums

You could set this up as separate entities too,

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Master LLC = Clark Holdings, LLC, a Texas series limited liability company.

First series = Clark Property Management, LLC, an individual series of Clark Holdings, LLC, a Texas series limited liability company.

Second series = 123 Main Street, LLC, an individual series of Clark Holdings, LLC, a Texas series limited liability company.

Third series = 456 Main Street, LLC, an individual series of Clark Holdings, LLC, a Texas series limited liability company.

I run my property management through the first series. The second and third series each hold their respective property and the respective debt.

If, subsequently to setting up my series LLC, I buy another property, I simply add a fourth series (i.e., 789 Main Street, LLC, an individual series of Clark Holdings, LLC, a Texas limited liability company). If I subsequently sell the asset in the first series, I then can dissolve that individual series.

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I talked to my insurance agent with a lot of experience here in KS. He said each entity would have a separate policy depending on the business it was conducting. He said he may have to find different underwriter's for each depending on who the owner(s) and business conducted. If the management co managed only my properties it would be simpler. He said underwriters might scratch their heads trying to figure why I am setting it up this way, from there stand point they prefer one LLC(shows the difference right there insurance vs law). It would be hard and costly to insure this structure as I said long ago. I said I'd want the LLC to be the insured on all entities, on the rental properties the LLC, although if I had a loan I'd be personally liable. He said he has seen some cases where the underwriter wants the owner listed and the LLC as an additional insured.

He too, along with the CPA I met with today, and attorney now have not heard of series LLC. Just goes to show even the pros don't always know. You'd have to be a national CPA, Insurance Agent, and Lawyer to even begin to offer advice here, I will not claim be. My ego is not that out of wack.

There’s a lot of bad info on his thread about the internal working’s (members (sole-multi) and external charging orders or foreclosures of members interest I don’t care to debate with non-attorney’s, nor tax and insurance that are not licensed nor have experience in court in my state.

Tiffany, definitely find someone in your state that knows what they are talking about, that is if you can, I’m not having much luck so far. Thanks for posting this question I am looking at it to. I learned a few things from the Articles I posted to discuss with an attorney as soon as I find one that knows this structure.

I’m no insurance agent but from what mine is telling me and I understand a general ‘umbrella’ homeowner’s policy like for a homeowner does not cover commercial operations and product liability REI conducting real property business falls into if you have an LLC.

Whether you conduct operations inside separate LLCs such as a Master that owns other LLCs vs a Series LLC the legal structure there, my understanding is in the 9 states above differs. I would guess(it makes sense to me anyway) to keep each property in a separate LLC so the assets are not united, not have a Master own other LLCs, but that will depend on how your state sees these structure legally….this is where you need an attorney that practices corporate, RE(landlord-tenant law), contracts, and bankruptcy to name a few in NC. It can get very legally hyper complex and no one out here will probably answer this question properly.

For the small business guru's those Series LLC that are growing in popularity look very attractive. I talk to one very experienced liability/construction law attorney other day, but they are so new here he never heard of them. I will interview more soon. Also I am discussing it with tax preparer's looking for both to add to my team. I know the book keeping will need to be separate. Like the article said about tax, seems as they see them as separate entities. Here disregarded entities(meaning not taxed, flow through to personal) that pass income onto 1040s there is no state(as of 2013) or franchise(tax to do business here). So find professionals that keep up on the laws, I just fired my tax preparer for not knowing this. There are also other purks in states like this that make having Master LLC in them, companies do it all the time and as the Article stated Real Property law suits may or may not revert back to a state that does not have Series LLC statues.

NC may not have Series LLC yet but sure is one beautiful state :)

Good luck!

@Steven Hamilton II We'll have to agree to disagree here. Legal structure and insurance policies can not be compared, an entity is not an insurance policy or visa-versa. An insurance policy is not a statue, although there are statues that governs them. A combination of sound legal structure in the right state and insurance is the best protection out there, other than the knowledge of knowing how to run a business legally, and keeping assets out of of public reach.

One of the problems I failed to mention is insuring a Series LLC. It can become just as vague and ambiguous as a liability suit or bankruptcy proceeding's as mentioned in the Article. When you have a "Master" LLC with child LLCs legally embedded, but separate. That will vary depending on if it is a state that is a true series statue state or not.

If you start a series of LLCs you won't be inuring them under an "umbrella" policy. It will be a "commercial liability policy" CLP that will insure each operation of the LLC independent of the other, just as the states statue treats it. That is where the assets are and what you want, isolation.

For example, if the Master LLC is a financial entity that holds assets in NV it is insured as such. If a series is a rental property in NC it is insured as such. If another series is a parcel of land in NC it is insured as such, if others a construction and management co, etc.....The policy will specify exclusions and rates for the type of business being conducted for each entity. You be hard pressed to find a policy that covers it all like a home owners umbrella policy, if you did it cost a fortune and I would not trust it.

Also important to insure each entity for "products/complete operations" of 2mil min, and aggregate 2 mil min. Each completed product and operation will be different but related, If it is not you probably do not need a series LLC, one LLC and CLP will do.

If you have or manage subs in a construction co and do not do work get a Worker Comp policy to protect the entity not you. Have your subs sign a contract that indemnifies you and list you on their policy.

Remember any suit against you personally that attacks your livelihood or causes you to pay potentially large attorney fees is asset protection. You certainly don't have to wait to have assets in real property or a business to protect that. A judgement, attorney fees, loss of assets owned now or in the future can be alot of $.

I wonder what happens when say one kid gets a parent to sign the BD as them as the sole bene, but prior to that two of the kids where to receive and split all assets in the a will executed prior to the BD. Now the kids are going to probate court or does the BD prevail since it is the earlier signed doc?

I wonder if a BD is free and clear?

There are many ways to structure it, the beauty of LLCs vs S and C corps with more structural rules.

Doesn't look like NC is one of the 9 states that allow and recognize Series LLC's. The Nine states with a true Series LLC statue are; Delaware, Iowa, Nevada, Utah, Illinois, Oklahoma, Texas, Tennessee, and now Kansas (Yeppie :)

Here is an interesting Article about NC recognizing legal internal/external structure from a Series LLC from NV: Sounds to me like one could hold assets in one the Mother I'll call "9" business friendly states, operate a series (or property) in NC, depending on how the operation is structurally performed end up under 9 or NC law in a landlord-tenant or flip limited liability suite, foreclosure, or charging order. Since NC has no Series LLC, from what I gather that could be in favor of 9 law. Plus, most 9 states have no franchise or corp tax for general partnerships unless you make an S election. You still may be liable for NC depending on how and where the income is being produced, a good tax prepared has ways.

http://www.borelassociates.com/topics/Series_LLC_in_Business_Planning.pdf

http://www.matnsorensen.com/utilizing-multiple-llcs-a-new-series-llc-state/

LLC is new to REI it will be interesting to watch history unfold, not here on BP, in courts across the country.

Agree it is good to find good council, better to educate yourself first :)

@Joel Owens

What did these SEO and rating sites think would happen over the long term? Let’s do the math in this case simple addition and subtraction.

They continue to mislead consumers by putting them at the top of search engines and give them five star rating’s by a broken system that lets companies rate themselves or pay for it, etc. Now the consumer experiences a rating system only to find that the company is the worse of the bunch. Now over time the consumer learns the internet is not a credible of reliable info word gets around.

The article says some companies will be willing to take the small penalty for the large profit, do the math it won't last forever before the opposite is true.

Will penalizing companies for rating themselves solve it? Problem not it is so massive, (EG:New York just wants a piece of the pie), besides this problem comes in many forms and faces, some of it is not even on the internet and has been around a long time.

Answer: Customer satisfaction by word of mouth, not perfect but far better than this.

It’s about time the internet review system is completely out of hand and has no credibility. Even if you take away companies that do their own reviews, look little deeper at BBB that favors the business owner since they pay their bills, or Angies list that gives companies perks if you bring them members, or all the SEO companies out there that put your company at the top of search engines misleading the consumer into thinking they are the best. Yelp is no better than the rest; I got no idea why they mentioned them often in this ad.

It will revert back to old school word of mouth where you find a good contractor from your barber that worked on their house, etc. Now we even have networking clubs that put people together and all you have to do is pay an annual fee to join. Wow, now we have someone that has no idea how well a company performs recommending them to someone in the network so the favor is paid back.

I prefer the good ol yellow and white pages when all this hype didn’t surround advertising. Well you had your big ads, but not all the other BS.

What a mess!