A Limited Liability Company (LLC) is simplest and most inexpensive business structure in the United States whereby the owners or members of the LLC are not personally liable for the company’s debts or liability. Two advantages to purchasing a home using an LLC include privacy and protection. By choosing to buy a home using an LLC, the owners of the LLC remain anonymous as their name does not become a part the public record and they are personally protected from individual liability in the event of a lawsuit.
Privacy for Homeowners Because the LLC Is Listed as the Property Owner
An LLC is the preferred way to acquire property for buyers who do not want their names or addresses in public record. An LLC prevents a buyer’s name from entering the public record because the name of the LLC appears on all public records, and not the name of the members or owners of the LLC. Thus, for those who do not want others digging through public records and obtaining their names and addresses, the LLC is a perfect solution. By using an LLC, it is difficult for someone to figure out your address or how much you paid for a property unless they know the name of your LLC.
An LLC Provides Owners More Protection in the Event of a Lawsuit
If someone owns their residence in their name, anyone who is injured on their property can sue them directly. Any lawsuit that exceeds their homeowner’s insurance (and umbrella insurance) will place other assets––including savings, investments and home equity––at risk of being garnished to pay the rest of the damages.
On the other hand, the biggest advantage of an LLC is that the members are not personally liable for the actions of company. The members personal assets (homes, cars, bank accounts, investments, etc.) are protected from creditors seeking to collect from the LLC. Therefore, if you own your home in an LLC, then the lawsuit can only name the LLC, and the only assets that can be used to pay off the suit are those assets held in the LLC, which usually would be limited to your home.
Investors purchasing properties they intend to rent to tenants commonly use an LLC because of the liability protection offered by the structure. When owning property as an LLC, property taxes and other homeowner expenses are paid by the LLC. One additional cost with an LLC (in addition to start-up costs such as legal and filing fees), is an annual-report filing fee which varies from state-to-state.
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(855) Tim-MLaw (855-846-6529)