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Suspect Studio Apartment Rental

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Zoe231

Member
Okay so I need some advice here. Found an apartment a price and in a location that is just perfect (too perfect). Got on a call today with the group renting it out; so it is a private apartment in a bigger building with other apartments they want to use as short term rentals. They aren't allowed to do the short term rentals unless the owner lives in the property. To work around this, they would want to sign the new tenant as part of their LLC as part-owner so they can say the owner lives there. They also want the new tenant to sign an NDA. Is this a thing?
My spidey senses are telling me too good to be true & they aren't giving me the full story/ explaining what risk I'd take on. Coming up short on research, so if anyone could help before I potentially make a big mistake, that would be nice!
 


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Zoe231

Member
Zigner said:
What US state?
Do you want to participate in (what sounds like) fraud?
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In New Hampshire; they said this is perfectly legal, and the NDA is so when people in town ask questions, we just say "yeah we're part owners" & nothing more. Even said down the line, if they sell the house, we'd get a small percentage as part owners if we're still there, but that we don't have to actually do anything but be tenants. They will do this with each new tenant.
 
Just Blue

Just Blue

Senior Member
Zoe231 said:
In New Hampshire; they said this is perfectly legal, and the NDA is so when people in town ask questions, we just say "yeah we're part owners" & nothing more. Even said down the line, if they sell the house, we'd get a small percentage as part owners if we're still there, but that we don't have to actually do anything but be tenants. They will do this with each new tenant.
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Yeah...in MHO it really seems to be fraud. Consult an attorney regarding this.
 
STEPHAN

STEPHAN

Senior Member
The LLC trick was sometimes used to (legally) go around city or HOA restrictions. I know a few cases where this works. However, most cities and HOAs have amended their rules.

The LLC trick was legal in Vegas for a while to do short-term rentals. I know a homeowner who had many of these. They won in court against the city. I don't know if they are grandfathered in now or if they had to stop when the city changed the rules.
 
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Zoe231

Member
STEPHAN said:
The LLC trick was sometimes used to (legally) go around city or HOA restrictions. I know a few cases where this works. However, most cities and HOAs have amended their rules.

The LLC trick was legal in Vegas for a while to do short-term rentals. I know a homeowner who had many of these. They won in court against the city. I don't know if they are grandfathered in now or if they had to stop when the city changed the rules.
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Interesting. They did mention how when they bought the property for short term rentals, the zoning board told them they couldn't rent unless the owner lived there; so it is doable. I guess the question now is what risks do I take on, and how does this impact the community around the home?
 
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Zoe231

Member
AlmostThere said:
So, how much of the building will you own? What rights and responsibilities would you have a part owner?
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Allegedly it's for name/official purposes only. I wouldn't have to deal with other tenants or do anything. They're responsible for fixes & everything a landlord would need to fix; their name goes on airbnb, & when I leave they'll "transfer" the LLC to the next tenant. I haven't seen any contracts/agreements yet. But even if this was legal, I'm really questioning the ethical side of things. I mean people like this must be part of the housing issue- those STR would be like $1,000/day in a tourist attracting area & the property owners don't even live/ aren't from NH
 
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FarmerJ

Senior Member
Let them find someone else to run this scam on, I say this because by participating in the scam you could be a target of law enforcement should the scam come to light and yes it really could because if something were to go wrong with another tenant say calling the city to report them then you to would have a target on your back and have to defend your self.
 
not2cleverRed

not2cleverRed

Obvious Observer
Zoe231 said:
Allegedly it's for name/official purposes only. I wouldn't have to deal with other tenants or do anything. They're responsible for fixes & everything a landlord would need to fix; their name goes on airbnb, & when I leave they'll "transfer" the LLC to the next tenant. I haven't seen any contracts/agreements yet. But even if this was legal, I'm really questioning the ethical side of things. I mean people like this must be part of the housing issue- those STR would be like $1,000/day in a tourist attracting area & the property owners don't even live/ aren't from NH
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I'd be mighty tempted to contact code enforcement and innocently ask whether this complies with local code...
 
adjusterjack

adjusterjack

Senior Member
Zoe231 said:
Allegedly it's for name/official purposes only.
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You would be a member of the LLC. If the LLC was sued for something, the individual members would likely be named defendants in an effort to "pierce the LLC veil" (google it) and get at the assets of the members.

While you might eventually be dismissed from the lawsuit, you could pay many thousands of dollars for attorney fees to get out from under.

Members of LLCs are also liable for their own criminal acts or civil torts. Participating in the scheme makes you culpable.
 
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