Putting the townhouse into a LLC

[elmxl]

What is the name of your state (only U.S. law)? SC

Wanted to start a new thread but it's in continuation of the crazy tenant that we have that had a "sharp utensil" in her hand.

My husband and I think it's a good/smart idea to put the house into a LLC. We own another townhouse in the development and the house up in NJ.

The lawyer said that we have to re-do the lease because they are no longer renting from us but rather the LLC.

We foolishly wrote a long term lease (more than one year) since it guarantees us a tenant and it locked in his rate. win win (please do bash me for this - didn't have a good day).

With the lease agreement legally having to be redone, can we change the terms of the lease now to one year?

 

[FlyingRon]

Why does your husband think this is going to help?

Nothing will prevent the crazy tenant from suing you even if the townhouse is not in an LLC.
If there is some negligence or other actionable action on your part, they can sue you even with an LLC.
You can deed the house to an LLC, but the lease is in force and binding on the LLC. You can't force the tenant to change their lease to the LLC.

 

[elmxl]

Why does your husband think this is going to help?

Nothing will prevent the crazy tenant from suing you even if the townhouse is not in an LLC.
If there is some negligence or other actionable action on your part, they can sue you even with an LLC.
You can deed the house to an LLC, but the lease is in force and binding on the LLC. You can't force the tenant to change their lease to the LLC.

Isn't the whole idea behind an LLC to protect you from big losses?

The lawyer in SC said that we needed to change the lease because they are no longer renting from us, we don't own the house but rather the LLC does.

I will revisit this when i speak to the attorney tomorrow. i will post the information on rewriting the lease.

 

[FarmerJ]

Rather than a LLc maybe the better way to go is to have a long talk with your insurance agent to expand coverage on your end of things and in the future to require tenants to have own renters policy. Did your attorney tell you why your current lease could not be transferred to a LLc or any other so called new owner ?

 

[elmxl]

Rather than a LLc maybe the better way to go is to have a long talk with your insurance agent to expand coverage on your end of things and in the future to require tenants to have own renters policy. Did your attorney tell you why your current lease could not be transferred to a LLc or any other so called new owner ?

We expanded coverage with an umbrella considerably.... He took out renters insurance with 10K liability .. Joke!

My attorney's office told me that we need to change the lease. I didn't ask about it or bring it up, they said it has to be redone. They are not leasing from us but rather from the LLC. They will send rent checks to the LLC.

South Carolina law perhaps. The llc will be filed there.

 

[FlyingRon]

The attorney can say what it would be GOOD for you to have happen, but you can't force a tenant to change their lease midterm. You can try, but they are not obliged to sign such a modification. Barring foreclosures, leases apply to the successive owner.

The LLC provides LIMITED liability protection. Very limited. You can't just make your own personal liability go away because you make an LLC. You are always responsible for your own actions. An LLC is useful when there is some liability ascribable to others.

 

[elmxl]

The attorney can say what it would be GOOD for you to have happen, but you can't force a tenant to change their lease midterm. You can try, but they are not obliged to sign such a modification. Barring foreclosures, leases apply to the successive owner.

The LLC provides LIMITED liability protection. Very limited. You can't just make your own personal liability go away because you make an LLC. You are always responsible for your own actions. An LLC is useful when there is some liability ascribable to others.

I will wait to hear what the attorney says about the lease agreement. If we no longer own the house, but the LLC does, they rent from the LLC, right.

I will post here and let you know.

 

[latigo]

I will wait to hear what the attorney says about the lease agreement. If we no longer own the house, but the LLC does, they rent from the LLC, right.

I will post here and let you know.

I suggest that you seek the advice of another lawyer. Telling you that the lease would need to be rewritten rather than accomplishing the same result by an assignment from you to the LLC sounds like someone is baiting you for the fee of drawing up a new lease.

And what if the tenants refuse to sign a "new lease"? Did he mention that likelihood? Did he mention that you could bring no leverage to compel them to do so?

But before you proceed with this foolish notion, ask your attorney to list all its advantages and disadvantages. (A "sticky note" would suffice for the former.)