The Advantages of Forming a LLC for Real Estate Holdings in Ohio
An LLC Offers the Landlord the Most Protection
The attorneys at Harris & Engler help landlords across Columbus, Delaware, and greater central Ohio. In order to be best protected, a landlord should form a Limited Liability Company (LLC) for each separate rental property. Many landlords in Columbus unknowingly overexpose themselves to potential liability by owning rental properties in their personal names.What Can Happen If Landlords Own Rental Properties as an Individual
If a landlord owns a rental property as an individual then virtually all of that landlord's property is at risk if they get sued. If a tenant gets hurt on the landlord's property, or anyone the tenant invites on the property gets injured on the property, then the tenant or third party will be able to go after the landlord personally.First, the tenant would attempt to invoke the landlord's homeowner's insurance policy (and the homeowner's insurance policy must be specifically issued to owner as a Landlord, and the insurance company must absolutely know that the property is a rental property). After the tenant invoked the landlord's homeowner's insurance policy, if the injuries exceeded the amount of the policy then the tenant could go after the landlord's personal assets and other properties. So if the landlord owns multiple properties, then all of the landlord's properties are at risk if they get sued.
Insulate Landlord Liability
A Landlord is best served by forming a separate LLC for each rental property. This way if a tenant or guest gets injured on one of the landlord's properties, then the tenant would still file a claim with the homeowner's insurance policy, but if the extent of their injuries exceeded the policy limits, then they could only go after the assets of the LLC itself, and only the assets of the LLC would be that individual property owned by the LLC.An additional reason for Landlords to form a LLC to own rental properties is in case someone sues the landlord personally and obtains a judgment for any other reason (not necessarily a tenant suing the Landlord, but for example, a business deal gone bad), then they could have access to all of the Landlord's assets, including all property owned by the Landlord. If the Landlord forms a LLC for each rental proeprty, and someone sued the Landlord personally, then they could only have access to the Landlord's personal assets, and not the properties owned by the LLCs.
