Using a Single LLC vs. Multiple LLCs to Own Multiple Parcels of Real Estate: Real Estate Radio Hour Legal Minute, February 22, 2014

Closing out the theme of “things people do in real estate transactions when an attorney isn’t involved”, my February 22 Legal Minute touched on a mistake that falls into the “penny wise, pound foolish” category; namely, using a single LLC to hold all of your real estate holdings in an effort to save on costs of formation (including attorney fees).  You can here the audio here.

One or many?  That is the question when it comes to how many LLCs does a property owner need to hold their investment real estate.   Use of a single LLC to own multiple parcels of property is a risky proposition, as any liability arising with respect to one property will put all of the real estate owned by that LLC within the reach of creditors.  On the other hand, if a property owner formed a separate LLC to hold each parcel of property, while the costs and fees associated with forming those LLCs may be higher than if only a single LLC was formed, use of this strategy can aid in compartmentalizing the risks associated with each property and segregate liability within each LLC.

As always, archived segments are available here.