Should I put my rental property into an LLC or corporation?
Should I put my rental property into an LLC or corporation?
Should I transfer my rental property my LLC?
Should I form an LLC for my rental property?
What are the benefits of putting my rental property into an LLC?
Stay tuned as Atty. Tom Olsen and Atty. Rob Solomon answer these questions and more!
Attorney Tom Olsen: Rob, here's another text to us, and it says that this -- he's a landlord -- he says, "Rob, I used to do my own evictions, then I put my rental property into an LLC. Now, I'm trying to do my own eviction, and the court's not letting me. What's going on?"
Attorney Rob Solomon: So, Florida law requires that corporations, which an LLC is, a type of corporation, can only appear in court with attorneys. This is not just about landlord/tenant law, it's about any kind of appearance in court. The good news is, that our local courts have interpreted that in a way that allow landlords to file papers, even if they're corporations, to file papers, and if, let's say a tenant doesn't answer or put money in the court registry, it allows them to keep shuffling papers forward, they don't consider that an appearance. But as soon as, literally, a body has to appear in court, the first thing the judge is going to say is, he's going to stop the proceedings, and require that same person, who has otherwise had no problems up to this point, he's going to require that person, which is really a corporation, to have an attorney to move forward.
Attorney Tom Olsen: I had no idea that was the case, Rob.
Attorney Rob Solomon: Yes.
Attorney Tom Olsen: Well, I know that often, I get calls from people who own rental properties, and their question to me is, "Hey, should I put my rental property into an LLC?" How are you handling that with your workshops? What are you giving to people as advice as far as putting rental properties into LLC?
Attorney Rob Solomon: This is also a common question, and a good question. And so, there's benefits to putting property into a corporate entity, and the benefit is, as you know, is a reduction in liability, a protection against potential liability. But the downside of it is, as I know, I'm a corporation, you have to file the bleeding paperwork with the state each year, you have to pay taxes, you have to do all this extra stuff. And the question is, "Does the benefit outweigh the cost?" And my attitude is, if you're a one-time landlord, you own one piece of property – probably doesn't. But if you're a multiple owner of properties, and you do this as a business, I get it. That makes some sense, because you get accustomed to filing all this paperwork. But I'm not so sure that there's as much liability as landlords think there is, and I think they totally underestimate the hassles involved with running a corporation.
Attorney Tom Olsen: Hey, everybody. My special guest today is Attorney Rob Solomon. He's a lawyer in my office, and he focuses on landlord/tenant work.