Judgment Enforcement Effective Strategies for Collecting

Have you ever wondered how about judgment enforcement on non-paying tenants? Or maybe you want to know what your options are other than evicting someone and putting them out on the street?

If so, you’re in the right place. Keep reading to learn more about:

What Is Judgment Enforcement?

First, it’s helpful to know that a judgment is merely a court order or a decision from a lawsuit. Sometimes, the court will order the defendant to pay the plaintiff a certain amount of money in the judgment.

Lawsuits happen. In most cases, it’s not if but when they occur. As a real estate investor, you must protect your financial future and assets. Take our FREE, five-minute investor quiz to learn more.

Why does this matter for real estate investors?

Here is a typical example you may encounter as a real estate investor. Imagine you have a tenant who has stopped paying rent. While it may not be easy to evict your non-paying tenants, they still owe rent to you. You have other options available for judgment enforcement.

What Should I Do If a Tenant Stops Paying?

You don’t always have to evict. You can sue the tenant for breach of contract, get a judgment, and then enforce the judgment. Remember the tenant signed a lease agreement with you. You can sue the tenant in small claims court.

What is a small claims court?

First, you should know the rules that control your state’s small claims court system. Second, you should know that small claims court is a low impact, relatively cheap, and hassle-free way to get paid.

In general, small claims courts are:

How does small claims court work?

What’ll happen is this, you will file a suit in small claims court against your tenant for breaching their rental contract with you. After that, the court will set a hearing date. Then you serve your tenant with papers (this is easy because you know where they live).

Both you and your tenant have the opportunity to represent yourself in court. Present your facts:

After that, the court will most likely issue a judgment in your favor. Here are some things to consider about court decisions:

After you win a case, you will need to enforce the court’s judgment.

What Tools Do I Have for Judgment Enforcement?

If your state allows it, you can:

These options are convenient because you most likely have your tenant’s job history and banking information already on the leasing contract.

Wage garnishment

Suppose you’ve won in court against someone that is gainfully employed. In that case, you may be able to garnish (or collect) a portion of their wage to satisfy your judgment.

Just the threat of wage garnishment is enough for most defendants to pay. Generally, to garnish someone’s wages, you don’t have to expend much effort:

There are various rules and limitations to wage garnishment, but this is an effective judgment enforcement strategy.

Bank levy

You have your tenant’s bank information, so it might be better for you to enact a bank levy.

When you win a money judgment, you become a creditor, or someone owed a debt. As a creditor, you may be able to tell the bank to withdraw money from an account without the debtor’s permission.

Sell the judgment

Another option for judgment enforcement is to sell the judgment to an enforcement specialist. Selling is a win-win situation because it allows you to relinquish the responsibility of debt collection to a third party.

Selling debt might be a good option for you if you think the debtor cannot pay or will not pay. The enforcement specialist will usually enforce the judgment and pay you a portion of the debt.

Key Takeaways About Judgment Enforcement

You have rights as a landlord too. When a tenant does not keep their promise, you should follow the law because it’s the right thing to do.

We discussed what judgment enforcement means, how to take action against non-paying tenants, and what tools you have available to enforce judgments. Now that you know this information, you have proven strategies at your disposal to ensure that your real estate investment journey is successful.

Secure your financial future, and register for your FREE Royal Investing Group Mentoring Wednesdays at 12:30 pm EST!

Dog Bites and Landlord Liability: Know Where You Stand

Making money as a landlord is hard. 

As a real estate investor, you have to deal with zoning, regulations, bookkeeping, advertising, online marketing, showings, no-shows, bounced checks, late payments, and the fun of fixing a broken toilet on Christmas eve. 

Keeping the money is even harder. 

You are constantly spending money on maintenance and repairs, expenses, insurance, mortgage payments, marketing, and more.

But as a real estate investor, you have probably taken all these costs into your investment strategy. There is one risk  too many landlords overlook, however: dog bite liability.

Unfortunately, if you are renting to tenants with dogs, you have a furry minefield of liabilities threatening your growing real estate investments. One dog bite lawsuit can wipe out all your hard-earned rental profits in the blink of an eye.

No matter how much you love dogs or how well you treat your tenants, a dog bite lawsuit against your tenant will almost certainly include you as the landlord. Pet ownership laws tell you your legal responsibility for your pets. These laws are complex and different in every state. 

As usual, we'll start with some education ...

dog bite liabilityLandlord Liability in Tenant Dog Bite Cases

Fortunately, in most cases, you (as the landlord) may not be DIRECTLY liable if your tenant’s dog bites someone. Just because you leased property to tenants with dogs is usually not enough to make you legally responsible for damages. But again, the landlord’s liability is different in each state and hard to predict.

As a real estate investor, you should know the three critical scenarios that affect your liability.

#1 Landlord Knows -  But Does Nothing

If a landlord has actual knowledge that his tenant is keeping a dangerous dog on the premises, some states will find him liable if he does not remove the dog to ensure the safety of others. The tricky part is that it is not the knowledge that makes the landlord liable. It is the fact that he knew and did nothing about it. 

Suppose the landlord has control over the property and knowingly allows a dangerous and vicious animal to be kept on the property. In that case, many states will find him at least partially liable for any damages.

pit bull with kisses#2 Landlord Knows - But Can’t Remove the Dog

But, let’s say the landlord knows the dog is vicious but cannot remove the animal. Seems impossible, but it is not. If you bought an apartment building with existing tenants, you might not have the authority or power to remove the tenant or the animal according to the existing lease. 

If you try to legally remove the dog but are denied by the court, you might not be held liable in some states for future dog bite attacks. But don’t count on it. Even if you could not remove the dog, you still have a duty to protect the other tenants and visitors to your property. Imagine what the judge will think if you do nothing. Now, imagine what the judge will believe if you warn all the tenants, put up warning signs, erect fences, establish safe areas and walkways, and closely monitor the situation. 

If you can remove the dog, then do so. If you can’t, you better have a suitable safety protocol in place.

#3 Landlord Harbors the Vicious Dog

This one is simple. If the vicious dog belongs to the landlord, or the landlord takes care of the dog for someone else - the landlord will most likely be liable  in every  state. 

Dog Bite Lawsuit Payout Numbers

There are about 85 million dogs in the US and millions of dog bites each year, according to the American Veterinary Medical Association. Unfortunately, most of them are children.

The number of dog bite claims in 2020 was 16,991 and dog owners paid out $854 million in damages, according to the Insurance Information Institute.

The top five state with the most dog bite claims are 

  1. California 2,103
  2. Florida 1,235
  3. Texas   969
  4. New York   881
  5. Pennsylvania   787

The average payout claim in the U.S. was $50,245, with New York at the highest with an average of $66,917. California averages almost six dog bite claims per day.

As a real estate investor and landlord, you should be aware that there might also be punitive damages in some cases should you be found liable under certain circumstances.

How Landlords Can Protect Themselves

Be Proactive

Build your dog-bite case defense today. Remove dangerous dogs from your properties if you can. If you can’t, then do the following:

Structure Your Business for Protection From dog bite liability

The American legal system can be stacked against you. A single lawsuit can wipe out your real estate portfolio if you are investing as a sole proprietor. That's why you need to protect your real estate business from dog bite liability. Man's best friend can be a landlord's worst enemy.

Whether you use trusts, LLCs, or other entities, you can establish asset protection and privacy—and usually gain tax advantages as well.

Most lawyers give cookie-cutter advice and use boilerplate forms and agreements. Remember, you are building your real estate portfolio for future income and asset security. Find asset protection experts who understand the risks you face.


Benefits of Forming an LLC (And A Few Risks)

By reading this article you are either a real estate investor or an aspiring real estate investor. You have surely talked with people discussing LLCs (Limited Liability Companies.) One of the struggles investors run into is finding reliable information that they can trust. Learning about the benefits of forming an LLC is no different.

Today I will tackle how to start an LLC. I will also list the risks involved in operating an LLC. After all, knowing the weaknesses of an entity can allow you to build a stronger strategy. This allows you to sleep well at night knowing all your bases are covered.

Benefits of an LLC

There are many benefits to using a LLC as the foundation of your real estate business. The most important benefit is that this entity limits liability and minimizes personal exposure in the event of a lawsuit. When a LLC owns a property it will be responsible for the property in court, not you. If the lawsuit it lost, the losses are limited to what is in the LLC.

Avoids the issue of “double taxation.” The LLC gives you the ability to file the property as a pass-through entity. You list any profits, or losses, on your personal tax return. But LLCs are flexible! They can be taxed differently depending on your needs. See our article on the tax benefits of the LLC for more.

The LLC can be formed and operated in all 50 states and is uniformly upheld across the United states. You can choose to form a LLC in your local state or in a any other state, depending on your needs.

A LLC can also function as a “operating company.” Sometimes also referred to as a “shell company.” Using a LLC in this way allows investors to limit their exposure even further! Utilizing a LLC as an operating company means that it holds the liability for your business operations. The difference is that you don’t place any assets in it. When it gets involved in a lawsuit you aren’t risking your properties, just your LLC. This article and video explains what this structure will look like.


Risks of an LLC

There is no “perfect” business entity, and the LLC is no exception to this rule. The important thing is to understand its strengths AND weaknesses to ensure your asset protection strategy is effective.

Most LLCs will have an annual fee and corporate management requirements. This will vary from state-to-state, so be sure to know what your state requires.

You need to form and operate the LLC to ensure it provides the liability protection you want. If you don’t form and operate the LLC properly, you are investing into an entity that does not protect you! This type of work needs to be done right the first time. You can also pay someone experienced who will file the entity and teach them you how to operate it right from the start.

The LLC will require separate banking, records and tax returns. This is to ensure that you are able to prove it operates separately from you. This also means more work for you. Once you get the hang of these entities it is very simple, but the learning curse can be rough.

All properties owned by a LLC are held in a “pool,” and are not protected from each other. This is why we recommend that investors with more than a single investment property use the series LLC instead.

How to Make a Lien Friendly & Protect Your Real Estate

Yes, there is such a thing as a “Friendly Lien." This is a lien against your property held by a party who is friendly to you. Ideally the “friendly party” is an LLC or corporation created in a jurisdiction (like Wyoming or Nevada) that allows you to use a nominee to make your involvement with the business anonymous.

The friendly lien will prevent potential litigants and creditors from pursuing the property since it’s "encumbered."  No sane lawyer will dive into a lawsuit before crunching the numbers. After all, why waste time trying to get a favorable judgment if you can’t get paid? This is why a friendly lien is a great addition to your asset protection toolbox. The lien will help make your property less attractive to predators.

But here’s the rub. It’s not foolproof and it can also end up being a quick lesson in how to lose money in real estate.

Friendly Liens Can Go Bad

You need to file a friendly lien the right way to avoid running afoul of the law. Offering a counterfeit lien or false instrument for recording can land you in the slammer in many states. Civil courts refer to it as “slander of title” and issue hefty fines for such actions.

So, what exactly is a bad lien? This is a lien that lacks economic substance. For instance, you shouldn’t claim that your LLC loaned you some money when it, in fact, did not.  The IRS and the court system won’t be forgiving. And you’d better hope you look good in black and white stripes if you go this route. Criminal penalties can include jail sentences of two to three years.

Using Friendly Liens the Right Way

You need to get a few things right to keep your property safe when using friendly liens. Unless, of course, your intention is to use the lien to obfuscate or defraud, in which case nothing will protect you from the law.

It’s Only an Asset Protection Smokescreen

The friendly lien only acts as a smokescreen. It will definitely not protect you from creditors coming to collect. If you have not actually borrowed any money from the LLC, then a friendly lien becomes a meaningless document. This is why we recommend a multi-pronged approach to asset protection for rental property owners.

Housing Discrimination Complaints: What Landlords Need to Know

No matter what walk of life you come from, you’ll probably be a tenant or a landlord at some point. As a tenant, you must stay on top of security deposits, rent increases, eviction policies as well as a number of state-specific ordinances.

Landlords have a number of responsibilities to handle as well. While every rental agreement may differ, there are a few issues that fall under the umbrella of housing discrimination that all landlords need to know. Today, we’ll go over important housing discrimination complaint facts. If you are a landlord or plan on becoming one, don’t wait until a complaint is filed against you. This quick guide can spare you from a costly housing discrimination complaint and serve as an important component in your overall asset protection strategy.

History of Housing Discrimination Complaints

In order for landlords to protect themselves from housing discrimination complaints, they should become familiar with the laws that govern these complaints. There are two main pieces of legislation that deal with housing discrimination complaints. First, is the Fair Housing Act of 1968. The act, which is also known as Title VIII of the Civil Rights Act of 1968, was created in response to rampant intentional and perhaps unintentional discriminatory housing policies.

These harmful policies went on for decades, harming a number of minorities, especially African Americans. In fact, the Fair Housing Act came on the heels of the assassination of Dr. Martin Luther King Jr. President Lyndon B. Johnson signed the Fair Housing Act as an extension of the protections found in the 1964 Civil Rights Act. On September 13, 1988, the Fair Housing Act was amended to also prohibit discrimination based on family status and disability. These laws were milestone pieces of legislation that were grounded in good motives.

However, as is the case with other well intentioned laws they can become overly complex and nuanced. This is why we recommend seeking experienced legal counsel when faced with housing discrimination complaints or tenant eviction cases.

What Does the Fair Housing Act Protect Against?

The Fair Housing Act provides protection for the following protected categories:

  1. Race
  2. Color
  3. Nation of Origin
  4. Religion
  5. Sex
  6. Family Status
  7. Disability

Landlords should keep in mind that disability refers to both mental or physical disability. Also, denying housing to a pregnant woman or a family with small children can be grounds for a discrimination complaint under the family status clause. The Fair Housing Act covers these protected categories not only in the tenant selection process, but throughout the landlord/tenant relationship. For instance, when it comes to renewing a lease, the Fair Housing Act is still applicable.

Avoid Housing Discrimination Complaints in Rental Ads

The rise of digital advertising can be a double edged sword for landlords. While it’s easier to get the word out about your rental units and perhaps cast a wider net of potential tenants, it can also lead to language that can be considered discriminatory. Let’s consider the scenario of a landlord named Rita. Rita has a spectacular piece of waterfront property up for rent. The property has attracted a number of older retired couples in the past. Thus, Rita puts what she thinks is a harmless blurb in an ad stating that retired couples with no children would be given priority in the application process.

While it may seem like Rita is simply trying to cater to her past clientele of tenants, this ad’s language can be considered discriminatory against families with young children. One way to avoid this unintentionally discriminatory language is to focus rental ads on describing the rental property, rather than the preferred tenant. Landlords should also keep in mind that the anti-discrimination laws that cover an initial rental ad also apply to the tenant phone screening or in-person interview.

One helpful tip landlords can use to avoid housing discrimination complaints is to create a standard tenant screening process. This helps avoid the chance of screening some applicants with one standard while using a different standard for other applicants.

Consequences of a Housing Discrimination Complaint

The consequences of a housing discrimination complaint can be dire. Complaints are made to the Department of Housing and Urban Development or to the tenant’s state/local housing agency. After this complaint, an often times lengthy investigation follows. The process usually results in a compromise between the landlord and tenant. The landlord can move forward by agreeing to pay off the accusing tenant or the landlord can agree to rent the property to the tenant. However, if a compromise is not reached, the case can end up in court.

The Department of Housing and Urban Development will hold an administrative hearing to determine the validity of the discrimination complaint. Also, if this administrative hearing has not yet begun then the tenant can also sue the landlord at the state or federal level. A negative ruling can lead to the following penalties:

  1. Forced rental. The landlord may be forced to rent out the property in question to the accusing tenant.
  2. Pay for damages. The landlord may be forced to compensate the accusing tenant for emotional distress as well as any monetary losses caused by the tenant having to rent another property.
  3. Pay civil penalties. The landlord may be forced to pay a state fine. In some cases, the first offense starts at $16,000.
  4. Pay for punitive damages. In rare cases of extreme discrimination, the court can award the accuser with thousands of dollars in punitive damages and force the tenant to pay their attorney fees.

Be sure to check out our article, When Should a Landlord Hire a Lawyer?

Know Your Options

As you can see, housing discrimination complaints can be grounded in subtle actions or the language used by landlords in the tenant selection process. Landlords can guard themselves by knowing the seven protected categories and ensuring that their tenant selection process doesn’t discriminate against any of these categories. Landlords can also stick to a standardized selection process. If a housing discrimination complaint has been filed against you, be aware of your options.

You may also want to see our article, How Landlords Protect Themselves From Lawsuits.

The Fair Housing Act's Protected Classes: What Landlords Need to Know

Over several years of helping landlords fight and win cases, we’ve noticed that the term “protected classes” leads to a lot of confusion. In this educational guide, we’ll discuss what all landlords need to know about the Fair Housing Act’s protected classes. We’ll clarify what each protected class means and examples of potential discriminatory actions against each class. In addition, we’ll discuss what is NOT a protected class under the Fair Housing Act. Before we get into those details, let’s first review the history of protected classes under the Fair Housing Act.

History of Protected Classes

Protected classes are those groups of citizens who are protected against discrimination due to their membership in one of the following classes:

  1. Race
  2. Religion
  3. Color
  4. Nation of Origin
  5. Sex
  6. Familial Status
  7. Disability

Before these protected classes were established, the general concern over housing discrimination came to light around 1966. At this time, war veterans noticed that those of color were being discriminated against when seeking housing in certain neighborhoods. This led to public marches for housing rights. These marches revealed that the Civil Rights Act of 1968 wasn’t extending to housing rights. In 1959, the California Fair Employment and Housing Act set precedent for the protected classes later found in the Fair Housing Act. The Fair Housing Amendments Act was signed on September 13, 1988. It added the last two protected classes, familial status and disability to the Fair Housing Act.

Race, Color and Nation of Origin in Housing Discrimination

Landlords may agree that discrimination towards these protected classes may not be as blatant as they were prior to or in the earlier days of the Fair Housing Act’s enactment. However, they do still exist in subtle forms. Landlord should know the difference between these protected classes and ensure that their tenant selection process and overall housing policies don’t discriminate based on membership in any of these three classes. Race refers to being White, Black, Asian, Pacific Islander, etc. It’s important to note that racial discrimination includes discrimination for perceived race or being biracial. The question “what are you?” can be a sign of racial discrimination. Also, racial discrimination can occur because of association with particular races.
For instance, a landlord who is hostile to a tenant’s black in-laws and prohibits them from visiting the property due to their appearance, can be accused of discrimination. Meanwhile, color discrimination is discrimination based on the lightness or darkness of an individual’s skin. For instance, renting out apartments to lighter skinned African Americans but not darker skinned African Americans is a specific form of color discrimination. Lastly, discrimination based on nation of origin means discrimination based on not only where you are from, but where your family is from and your language or customs. For instance, creating more favorable rental terms for native English speakers is an obvious case of discrimination. Refusing to rent out property to those who cook a specific customary cuisine can also lead to complaints, even if the reasoning is rooted in practical concerns over food odors.

Disability and Familial Status in Housing Discrimination

These two protected classes are more commonly discriminated against today. In fact, a 2015 study by the National Fair Housing Alliance found that discrimination due to disability made up more than half of all housing discrimination complaints filed with the Housing and Urban Development Department. Discrimination based on familial status made up around 10 percent of annual complaints. A common example of discrimination based on disability is when a landlord refuses to allow a tenant to modify their bathroom to include railings.
This example is more obvert, but also note that discrimination based on mental disability can be grounds for a complaint. Meanwhile, the familial status protected class was included in the Fair Housing Act as a means of protecting families with children under 18. Like in the case of other protected classes, landlords should be aware of both obvious and more subtle forms of discrimination based on familial status. For instance, denying a rental property to a tenant who otherwise qualifies for a unit because he/she has a toddler child is an obvious discrimination. However, cases have existed where landlords group families with small children into less desirable back of the lot properties. While this may be a defensive move to counter noise complaints, it unfairly restricts access to units that are otherwise available to other families.

What is Not Protected Under the Fair Housing Act?

In order to avoid unnecessarily accommodating some groups of people, landlords should also be aware of what is not considered a protected class. This can help prevent accommodating groups that may end up hurting your rental business. One group that is not protected under the Fair Housing Act is renters who participate in illegal drug activity. Current illegal drug use is not protected, although recovering addicts are considered a protected class since the addiction can be considered a disability. As you can imagine, this can be a complex exemption to interpret from case to case. If you’re a landlord dealing with a drug use case, don’t let your biases drive your decisions.
Our legal experts can provide sound advice based on current federal and state housing laws. In addition, the Fair Housing Act doesn’t consider source of income to be a protected class. Thus, in some cases a landlord can reject a potential tenant who wants to use housing choice vouchers. Although source of income isn’t a protected class in the Fair Housing Act, some states and counties do consider it a protected class. Landlords should be aware of not only the Fair Housing Act’s protected classes, but also any additional anti-discrimination policies enacted by their state and county.

Get an Asset Protection Lawyer

As you can see, knowing what is and what is not protected under the Fair Housing Act is critical in both protecting against housing discrimination complaints and protecting your business interest as a landlord. Understanding the more common complaints based on disability and familial status is especially important. However, as we’ve mentioned before even the most careful, well-meaning landlords can face lawsuits. This is why having a good asset protection lawyer is critical. Contact our experienced legal professionals today.

HUD Guidance Memo on Landlords’ Use of Arrest and Conviction Records

Do you use arrest and conviction records to assess potential tenants before allowing them to rent your property? You might want to read this as a misstep can destroy your business and your life.
The use of criminal history to assess existing and prospective tenants was delved into by a guidance memo published on April 3, 2016 by the Department of Housing and Urban Development (HUD). While such a memo doesn’t have any legal bearing in a court of law, it does hold sway with judges. The contents of the memo mirror those of the Enforcement Guidance memo published by the Equal Employment and Opportunity Commission so it didn’t catch those in the legal fraternity by surprise.
Here’s what you need to know regarding your dealings with your tenants on this issue.

Tenant Applicants with a Criminal Record

Tenants and rental applicants who have a criminal record have not hitherto received protection from housing discrimination. The HUD memo highlighted the fact that federal fair housing laws only protect individuals from discrimination based on color, race, familial status, religion, national origin, disability, and sex. Those with criminal records are exempted from this privilege.
The implication of this under federal law is that landlords had the freedom to adopt policies targeting those with a criminal history. For example, a rental applicant who had been convicted or arrested would be given no chance. Noteworthy is that some local laws such as those of San Francisco (the 2014 “Ban the Box” ordinance) prohibits questions about arrests on housing applications for homes that are  subsidized by the city.
Only people with a drug use conviction are exempted from this practice. The overriding theory for this is that drug users are actually dealing with a disability. This is a protected class as previously indicated. Drug dealers, on the other hand, do not enjoy this privilege. Fair housing lawyers have been trying to nullify landlord policies that reject tenant applicants with an arrest or conviction record for a while now. The inherent challenge has been how to do it given that these people don’t have the “protected class” status.  
In 2015 a U.S. supreme Court case held that housing discrimination was demonstrable where the landlord had clear bias against one group and where the landlord had a policy that seemed neutral at face value but had the effect of discriminating against a protected class.
A good example of real-world intentional discrimination is where a landlord’s policy states that

“I don’t rent to Blacks/Asians/women/gays, etc.”

Indirect discrimination or disparate impact is where the policy states

“I don’t rent to groups of people living in [an area where the majority of the population are a racial minority].”

It’s easy for the rejected applicant to prove discrimination in the first example by using the landlord’s stated policy as evidence. For the second example, the rejected applicant would be required to prove that the policy was discriminatory due to the large number of people belonging to a racial minority living in that area.

Disparate Impact and Arrest and Conviction Records

The memo captured this new way of proving discrimination. It is hinged on pointing out statistics that show that exceedingly more Hispanics and Blacks are arrested and/or convicted than their White counterparts. As a result, when a landlord includes the no arrest or conviction rule in their policy, these class of people are harmed disproportionately compared to Whites. While such a policy may seem neutral, it is actually a discriminatory policy against protected individuals.


The memo did not touch on the issue of turning away rental applicants and tenants who have relevant convictions. However, it did disagree with the rejection of applicants based on arrests without convictions. According to the memo this is inappropriate because an arrest simply shows that someone was suspected of an offense. While it’s required of the landlord to keep guests, residents, employees, and repair persons safe from would-be troublemakers, it would be a disservice to reject an applicant based on an arrest. An arrest is not a justifiable reason for rejection and is therefore not relevant during the screening process.


With convictions, landlords are allowed more leeway. Some convictions are indeed relevant to the landlord’s obligation to protect residents and other people in his property. For example, if the applicant has been recently convicted of assaulting a neighbor, the landlord has a justifiable cause to deny them tenancy. The same goes for a person who has a domestic violence conviction.
However, if the conviction is a few decades old then there is no valid reason to deny the applicant tenancy as chances are very slim that they will cause problems in future. The HUD memo goes further to suggest that landlords consider factors such as the age and nature of conviction before denying housing to an applicant. What was the applicant convicted for? How long ago was it? What circumstances surrounded the conviction? Have they been reformed and crime-free since the conviction? These are some of the questions landlords should ask before making a decision.
This would require a case-by-case evaluation of applicants. This is a job many landlords would loathe to do since they don’t have clear guidelines on how to go about it. On the other hand, landlords would have to make some judgment calls during the evaluation. For example, they would have to decide how old is old enough with regard to a conviction and hope that their decision stands in court if it is challenged.

White Applicants with Criminal Records

So, what is the effect of the HUD guidance on Whites with a criminal record? The memo seems to suggest that only Hispanics and Blacks can raise a discrimination claim as they are unduly disadvantaged by policies denying tenancy to those with criminal records. The implication of this is that a White applicant cannot argue that their race has been targeted disproportionately if they are denied tenancy as a result of an arrest record.
Does this mean that a landlord should only apply the no-arrest policy to applicants that are White? The memo does not delve into this issue, but we can always come up with a common-sense answer. For one, it is a recipe for trouble and confusion since you can’t tell landlords to discriminate applicants based on their race where different rules apply to different groups of people. As a rule, if a practice (rejection of arrest-only applicants) is unfair and consequently illegal for one group of people, it should be illegal to everyone.
Secondly, the United States Supreme Court has always been willing to extend the benefits of a rule that in a way affected one group of tenants to another group of tenants. For example, White tenant applicant challenged a prospective landlord’s practice of denying blacks tenancy. The grounds for the challenge were that the policy denied the White applicant the benefit of living in a racially-integrated community. They went further to note that the person blacklisted was not the only victim of the discriminatory housing practice. The high court agreed with the White plaintiff’s argument and the case was given the green light to proceed to trial.
Given the expansive provisions on who can challenge discriminatory practices by a landlord, it is clear as day and very likely that White applicants will find a way to benefit from the HUD memo.

When Should a Landlord Hire a Lawyer?

While there are some landlords out there who make a career out of being a landlord, most folks who rent out properties do so because it’s a lucrative form of investment. They own one or a few rental properties and are largely self-educated when it comes to the legal side of the business. In other words, they don’t necessarily keep a lawyer on retainer to answer simple everyday questions. It wouldn’t necessarily be cost-effective to do so.

For those landlords, the question of hiring an attorney is always one of cost versus benefit. Attorneys are expensive, but in certain instances, they can save you thousands of dollars and expedite unpleasant processes. So the question for most landlords becomes: when exactly should I hire an attorney?

When You’re Evicting a Tenant

Eviction is a nuclear option. Not only is the tenant being forcibly removed from the premises, but the eviction will stay on their record for the next seven years. Judges will require a high standard of misconduct committed by the tenant. While eviction lawsuits are expedited, the rules governing eviction lawsuits are strict.

Landlords who have experienced an eviction in the past have a better chance of successfully evicting a tenant. Still, unless you’re a lawyer, there are always going to be unforeseen wrenches thrown into the works. Even if you are a lawyer there may be unforeseen wrenches. Lawyers, of course, are better at anticipating and managing them. Hence, why they’re useful.

If this is the first time that you’ve ever been forced into the position of evicting a tenant, then having a lawyer guide you through the process can make a huge difference. In addition, there are some complex evictions in which even experienced landlords would want to have a lawyer help them. Those include:

When You’re Being Investigated or Sued for Housing Discrimination

The penalties for engaging in illegal housing discrimination are steep. Not only will a landlord potentially face a $16,000 decision, but they can likewise owe other damages to the plaintiff. If it’s HUD or some other agency that’s doing the investigating, it’s a good time to consult a lawyer in order to make sure that your bases are covered.
Worse still, is the likelihood that this information will become a matter of public record and be talked about in the news. Not only would a landlord face damages, but discriminatory practices could potentially damage their reputation in the community. This could, in turn, create problems for their business.

A lawyer will help a landlord manage the process as quickly as possible to avoid it blowing up in the press.

Be sure to check out our article, Housing Discrimination Complaints: What Landlords Need to Know.

Premises Liability Lawsuits

Personal Injury Lawsuits

There are a number of reasons that a landlord can be sued, but one of the most common is a failure to maintain a safe and healthy residence. Tenants can bring premises liability lawsuits if they result in personal injury. In most cases, the tenant will need to be able to show that they attempted to contact the landlord and resolve the issue through some form of communication. For instance, if a damaged railing results in an injury to a resident, they would have to inform the landlord that there was an issue in the first place.

The question that underlies all personal injury lawsuits is the role of negligence. The courts will hold a landlord liable when they knew or should have known about a potential safety problem. Negligence can be inferred circumstantially when a landlord’s responsibilities include certain routine maintenance, or the safety problem was a routine event that could have been foreseen. Otherwise, the tenant needs to explicitly make the landlord aware of the issue. Only if the landlord fails to respond could they then be held liable for injuries that occur on their premises.

Nonetheless, personal injury lawsuits are complex issues and having a lawyer handle them for you will produce the best results.

Property Damage Lawsuits

If a landlord’s failure to maintain his property results in damage to the tenant’s property, the tenant has a right to sue the landlord for damages. Some landlords require that their tenants carry renters insurance which may cover property damage to tenant’s belongings done on the premises.

Liability Insurance

Most landlords carry some form of liability insurance that protects them against potential injuries or property damage caused by their properties. Insurance companies will generally provide a lawyer on your behalf to settle the damages. Insurance companies may, however, not be willing to cover damages when the negligence is obvious or gross, or it violates one of the terms of your policy. At that point, you would need a lawyer.

The Bottom Line

Landlords that own major investments all over the city or make a living off of real estate generally have an attorney on retainer or are themselves, attorneys. For smaller investors, having an attorney on retainer may not make a whole lot of financial sense. There are nonetheless a number of problems that befall landlords in which having an attorney can save them thousands of dollars. In other words, they’re worth the cost.

Protecting your investment means successfully navigating these tricky situations. Defending yourself, in many situations, simply isn’t an option.

You may also want to see our article, How Landlords Protect Themselves From Lawsuits.

Tenant Injuries: Landlord Liability and Insurance FAQ

Even a good landlord occasionally finds themselves in a tricky situation. When a tenant injures themselves, there are a number of situations in which a landlord could find themselves liable for the injuries. This is especially true in instances when the tenant has just moved in. Central to the question of liability for premises and personal injury lawsuits is the role of negligence.

In order for a tenant to make a successful case against their landlord, they must be able to prove that the landlord was negligent in their duties to maintain a safe residence. What precisely does this entail?

The Role of Negligence in Premises Liability for Landlords

In order for a landlord to be held negligent in a premises liability suit, the tenant/plaintiff must be able to prove that either:

  1. The landlord knew about the safety hazard and did nothing to correct it
  2. That landlord should have known about the safety hazard

The first criterion pretty much speaks for itself. A tenant makes a landlord aware of an issue, the landlord doesn’t act on that information, and then a tenant or guest is injured because of the safety hazard. This is when the landlord could be liable for the damages.

The second criterion means that negligence can be inferred circumstantially under different situations. For instance, a landlord cannot claim ignorance of the fact that there is lead-based paint on their premises. Nor can they claim ignorance of the fact that any materials that were used in the construction of the property are potentially hazardous. The landlord is expected to know this information and to disclose it to anyone that is paying to reside in the property.

In addition, negligence can sometimes be inferred when a landlord does not provide a careful inspection of the premises before a tenant moves in. If the tenant is injured or has property destroyed due to a preventable and obvious problem on the premises, they can be held liable for damages and injuries.

How to Minimize Premises Liability for Landlords

It should not be a shocking revelation that landlords who keep their premises in excellent condition seldom lose or even have to fight premises liability lawsuits. Making a careful inspection of the property before a new tenant moves in and responding to tenant issues promptly will absolve a landlord of most negligence claims against them.

What you should do:

The Role of Insurance in Protecting Landlords from Liability

One popular way that landlords protect themselves is by investing in General Liability (GL) policies. GL policies protect owners from safety issues that may occur on the premises. They cover the cost associated with potential damages awarded to tenants and the cost of defending yourself against the claim.

What level of coverage should you purchase?

Personal Injury Lawsuits vs. Landlords

A tenant will win a personal injury lawsuit against their landlord when they can prove:

  1. It was the landlord’s responsibility to repair the defect that caused the injury.
  2. The landlord was notified of the problem.
  3. Fixing the problem would not have been unreasonably difficult or expensive.
  4. The injury was the likely result of failing to fix the problem or the injury would not have occurred if the problem had been fixed.
  5. The tenant suffered legitimate injuries as a result of the accident.

If a tenant can prove all of these, or that the landlord should have known about the problem the tenant is entitled to recover:

If, as a result of the injuries, the tenant is left permanently disabled, damages can be awarded into the millions in favor of the plaintiff. If the injuries are caused to a child on the premises, and the result is a permanent developmental disability, you can find yourself in serious financial trouble, to say the least.

The truth is, most premises liability claims against landlords can be easily avoided by carefully inspecting the property before a new tenant moves in, ensuring that you respond to the tenant’s issues promptly, and covering your bases in terms of having the proper levels of insurance. Landlords who follow this simple advice will never have to worry about fighting a premises liability lawsuit.

Mold in Rentals: Landlord Liability, Responsibility, and Prevention

Mold is a serious problem in a number of older homes. Not only can mold aggravate your tenant’s allergies, but it can decrease their quality of life, reduce their productivity at work, and even present serious health problems.
For landlords, no matter where you live in the U.S., it’s your responsibility to ensure that the place you are renting out is safe and habitable. All across the country, renters have won major personal injury lawsuits against their landlords in toxic mold exposure cases.

You can bet they’re going to go after you when their children start coming down with symptoms of mold exposure. Daily exposure to mold causes a condition called CIRS (Chronic Inflammatory Response Syndrome). Symptoms of the disorder include:

The sheer volume and variation of symptoms make it difficult for doctors to diagnose the problem. Nonetheless, toxic mold exposure can take a serious toll on a person’s life, and landlords can be held liable if it does.

Toxic Mold Exposure and the Law

Most states do not have mold-specific laws on the books. Nonetheless, the statutes that govern premises liability and personal injury liability remain the standard by which such cases are judged. That means the role of negligence governs the question of liability.

In order for an individual to be guilty of negligence in a premises liability lawsuit, that person must be aware that the problem exists or should have been aware that the problem existed. In other words, negligence can be inferred circumstantially in some cases. When the issue is toxic mold exposure, it’s not incredibly difficult for landlords to be held liable for having allowed a toxic environment to fester.

For instance, a landlord should conduct a thorough inspection of the premises before a new tenant moves in. If a tenant moves in and begins to display signs of CIRS, they have every right to recover damages from the landlord.
In states that do have mold-specific laws on the books, the burden is redoubled on the landlord to ensure that the environment is safe for their tenants. That could mean forcing the landlord to conduct timely inspections to make negligence even easier to prove.

Defending Yourself against Mold Tort

How Do You Know it Was Mold that Caused Your Symptoms?

There is a considerable amount of debate in the scientific and medical community concerning what kinds of mold are potentially toxic. Suffice it to say, if your tenant comes to court with medical reports, a diagnosis of mold exposure, and toxicity reports on the mold itself, it’s going to be very difficult for you to prove otherwise.

You Can’t Sue Me, It’s in the Lease Agreement!

Some landlords believe that, as a condition of their lease, they can write in a clause that absolves them of liability. It’s hard to imagine, however, that any state in their right mind would actually let a landlord off the hook for renting out a toxic environment. It presents a danger to public health.

You Caused the Water Damage which Led to the Mold…

This is a valid defense. If the tenant’s own negligence led to the presence of mold, the landlord can successfully argue that they are not liable for the tenant’s symptoms. However, if the tenant made them aware of the water damage, that effectively passes the hot potato back to the landlord whose duty it now is to remove the mold, regardless of who caused it. The landlord is free to charge the tenant, under the lease agreement for damage to the property.

Prevention and Cleaning of Mold

Mold likes moisture. Homes in the more humid areas of the U.S. are much more likely to require mold maintenance than those in more arid climates. In addition, mold likes dank and dark places that see a lot of wetness and moisture. The landlord or their property manager should be on top of making whatever repairs are necessary to ensure that their property is habitable.
How do you do that?
Firstly, each time a tenant moves out, you should inspect likely areas for mold. While it may not be readily apparent that the mold is toxic, it’s not exceptionally difficult to clean up either. Mold can generally be cleaned with bleach. This works on smaller mold buildup jobs that you will find below sinks and the like.
So long as the mold doesn’t dig its way into the wood cabinets, you will not need to dump thousands of dollars into their replacement.

The Bottom Line

As a landlord, if your tenants get sick because of mold toxicity, there are very few instances in which a jury will not find in their favor. So long as they can prove that it is more likely than not that their symptoms were caused by mold exposure, the landlord will lose the case. That’s why it’s incredibly important to document the property in pictures before each tenant moves in.
The one reasonable defense a landlord has, in a well-prepared case, is that the tenant’s own actions resulted in their exposure to mold. Before and after pictures can make this case. Nonetheless, there are limitations to such a defense. For instance, you may still be liable if the tenant reports the mold damage to you and you don’t act on that information. As always, the laws will differ from state to state, but correcting mold damage immediately is never a bad idea.


Interested in learning more? Check out our article Tenant Injuries: Landlord Liability and Insurance FAQ.

Becoming Judgment-Proof Against Litigation


Becoming Judgment-Proof Against Litigation

Becoming Judgement-proof may sound strange, but as a real estate investor you are in one of the most litigated industries in the United States of America. The United states is one of the most litigious countries in the world. You are exposed, especially if you hold assets in your personal name.

Hi, my name is Scott Smith, and I'm an asset protection attorney in the real estate industry, and I'm a real estate investor myself. What I do for my clients is make them judgement proof. That means if anybody were to sue you, they'd get nothing. This is the peace of mind that you can't get any other way when you're ever threatened with a lawsuit.

You might not know this, but a lawsuit is ranked one of the top three things that people find the most distressing events in their life, up there with divorce and bankruptcy. I can help you prevent from ever having that worry, and I do this in the same way that the really rich do it.

Using LLCs to Become Judgement-Proof

The truth is that the rich don't own assets, they only control them. They do this through a network of LLCs and trusts, which protect their assets and allow them to hide them from anybody looking to come after them.

Now imagine the disappointment of anybody looking to sue you when they find out that it looks like on paper you don't own anything. In fact, it would look like you would even qualify for food stamps. Who'd sue somebody that looks like they own nothing?

I can help you set this up, my name is Scott Smith, I'm with Royal Legal Solutions, contact us today and let's get going.

Lead Disclosures for Rental Property FAQ

Lead-based paint and heavy metal poisoning are one hazard that the government will expect landlords either to have professionally removed or disclose before renting out the property to tenants. This is going to be especially vital for tenants who are renting with children. Children suffering serious injuries due to lead poisoning has to be a landlord’s worst nightmare. Especially if the landlord did not disclose that information to his or her tenants before renting the property.
The law involving lead-based paint is established at the Federal level. This does not, however, prevent state and local ordinances from imposing stiffer fines or making the thresholds for culpability lower.
If you’re a landlord buying or renting older houses, it’s your responsibility to determine whether or not there is lead in the paint. This fact must be disclosed according to Title X Residential and Lead-Based Paint Act of 1992.

Exemptions to Title X Lead-Based Paint Disclosure Regulations

There are some properties that are not covered by Title X. Those include:

For obvious reasons, lead-based paint disclosures are designed to protect children from potential lead poisoning. The general rule of thumb is, if a child cannot or is not expected to live on the premises, then the landlord would be in the clear for disclosure. This includes vacation spots, single room apartments, and senior living facilities.

Lead Poisoning Symptoms

One of the reasons why the fines and regulations on lead-based paint disclosure are as heavy-handed as they are is due to the fact that lead toxicity can have a severe and lifelong impact on the development of children. In other words, many of the problems that are caused by lead poisoning may not be reversible.
Children who are affected may suffer from lifelong learning disabilities and developmental delay. On top of that, they may experience:

Lead poisoning can cause problems during pregnancy as well, including premature birth, low birth weight, and miscarriage.
While children are primarily impacted by lead poisoning, adults can be affected too. Adults can experience abnormally high blood pressure, muscle and joint pain, abdominal pain, mood disturbances, and low sperm count.

Lead Disclosures and Renovations

Landlords renovating properties that were built prior to January 1, 1978, must disclose lead hazard information to any and all occupants of the property at the time of the renovation. This includes apartment complexes where common spaces are being renovated. All tenants that would be affected by the lead hazard must be informed within 60 days of the renovation. If it’s a common area that’s being affected, then the landlord must distribute a notice to every occupant in the building.
The EPA defines a “renovation” as any disturbing of a painted surface under the Toxic Substances Control Act. The EPA also provides a pamphlet that must be handed out to tenants before the renovations begin. The title of the pamphlet is: Protect Your Family from Lead in Your Home”.

Other Potential Health Hazards in the Home

Lead is not the only potential health hazard one can find in a home. On top of lead, landlords can be held liable for asbestos as well. OSHA is the agency responsible for setting the standards concerning asbestos. The landlord is responsible for testing, disclosure, and maintenance of all buildings constructed before 1981.

Lead in Your Rental Property? These are Your Responsibilities

If you’re a landlord who is renting an older home the responsibility to inform your tenants about the possible dangers in your home falls squarely on your shoulders. In addition, the EPA is quite specific about how this is supposed to be done.
Before either signing or renewing any form of rental agreement, a landlord must disclose any knowledge of lead paint or other hazardous chemicals or materials on the property. In this instance, a landlord claiming that they didn’t know about a potential hazard will not save them from negligence liability. As a landlord, it’s your job to know.
The procedure for disclosing the presence of hazardous materials in a rental property is a formal process. It requires that both you and your tenant sign off on the disclosure. An example form for this process can be found on the EPA’s website. The landlord is then required to keep the signed copy of the disclosure with their rental documents for the next three years.
In addition, the landlord is required to provide every tenant with the EPA approved pamphlet that discusses the dangers of lead paint. That can be downloaded and printed for free from here.
What are the penalties for failing to comply with this regulation?
They’re steep. The state will fine landlords $16,000 per violation. In addition, if a tenant is insured because of undisclosed lead poisoning, the landlord will be liable up to three times their total damages.

Why Lawsuits Against a Series LLC Go Nowhere

If you’ve got money, people want it. Lawsuits are one of the easiest, yet still legal, ways for people to take your money. The more money you have the more likely it is someone will try to take it from you in a lawsuit. The same applies to your LLC if you have one.

The more money you have located inside of any individual LLC, the more attractive it's going to be for someone to sue you.  Lawsuits against a series LLC, on the other hand, are a dead-end for money-hungry lawyers and litigants.

Lawsuits are all about how much money can I get out of somebody, and if there's a million dollars sitting inside of an LLC in equity or cash, well, that might be something that I really wanna go after.

That's why you should limit the equity of any individual LLC to $200,000.

Note: This is not the case if you're using a series LLC for real estate, because series LLCs allow you to compartmentalize those assets. So, you don't have the same worries there that we do inside of a traditional LLC.

However, I think that usually a few million dollars inside a series LLC makes it reasonable to be able to create a new entity just in case. Why not? Expenses that you're being able to incur by having to create a new series LLC,are far less than the amount of risk that you pose when you're risking millions of dollars in equity.

You can read about what the IRS thinks about an LLC here.  But know this: The more money or equity you have inside your individual LLC, the more attractive it’s going to be for someone to sue you. And when they do, all of your assets will be caught under one legal net.

That’s why, compared to an LLC, a series LLC offers far more protection for you and your assets when it comes to lawsuits. Compartmentalizing assets means you can spread your assets out so in case someone does sue you, only one of your assets will be at risk.

Land Trust Asset Protection: What If The Trust Gets Sued?

Forming a land trust is a no-brainer for the savvy real estate investor. It helps keep the ownership of the property private and consequently insulates you from litigation. With a land trust asset protection strategy in place, the land title office is not able to disclose who owns the property. This comes in handy when you’re threatened with a lawsuit (as you’ll see below). When used in conjunction with an LLC, a land trust provides invaluable asset protection advantages.

How a Land Trust Helps Stop a Lawsuit in its Tracks

A litigant can sue you for all sorts of reasons, frivolous or legitimate. If they are willing to pay filing fees and serve a complaint, there’s no way to stop them.

However, getting a favorable judgment and getting paid are two different things.

They’ll spend a fortune on attorney fees only to hit a brick wall in recovering the damage award—if they get one at all.

A lawsuit, like a stool, stands on three legs:

  1. Injury
  2. Legal liability
  3. Recovery

If one of them is broken, then it becomes increasingly hard to sue. This is where the land trust comes in. It gives you personal anonymity and makes recovery a nightmare for would-be litigants. On its own, a land trust is not a fool-proof asset protection strategy, but it does help erect one more hurdle on the litigant’s path. The more hurdles you have, the harder it is for them to access your hard-earned property.

No attorney worth his salt is going to go into the wild goose chase involved in suing someone they do not know. After all, they need to determine whether you are indeed worth pursuing in court. 

Can a Land Trust Get Sued?

A trust, like any other legal entity, can be sued. But your property cannot be touched until they win and get a judgment in their favor. Rarely will the assets held in the trust be exposed to prejudgment attachments. You’ll probably have a few years to maneuver. However, there are cases where the assets held by the trust can be attached before the litigant gets a judgment against you.

This is why we recommend holding a single property in a trust. This will definitely not whet the appetite of any attorney looking to make a killing. After all, there’s not much to recover.

How Real Estate Investors Lose Money

How Real Estate Investors Lose Money

Real estate investors lose money in two ways. The first is because the actually made a bad investment. The second is because somebody took it from them. And they can do that easily through a lawsuit.

Lawsuits are basically just legalized stealing. So one of the key things that we have to do to guard against Half of the way that we would lose our money in real estate investing through litigations, let's protect ourselves from that. That's what an asset protection strategy is.

Dear Real Estate Investor: Lawsuits Are a Money-Driven Business


[00:07] As a real estate investor, you have to understand that lawsuits are a business and anybody's looking to sue you. They're looking to get money out of you. I've proper asset protection strategy keeps you from going from finding out what you own and if they ever were to see you, it limits what they can get to, but more importantly, a great asset protection strategy exhausts their will and the resources to fight you. This keeps people from continuing with the lawsuit. It gets them to settle early. It gets them, in most cases, to stop the lawsuit before it even starts. What you have to understand is that because law suits our business, the main part is how do we get money out of somebody when we sue them. This is what an asset protection strategy fights. Since it protects the assets from being seized by somebody via judgment, then that person doesn't believe that they're going to get anything out of their investment in a lawsuit because you see lawsuits only paid for in two ways.

[01:12] It's either I pay an attorney to sue or that the attorney takes it on contingency. But if in my research of the individual, I find out that they have no assets that it looks like on paper, then they qualify for food stamps. How much money am I willing to risk for a judgment which is merely a piece of paper without an asset to be able to seize a judgment is worthless. Moreover, there is no attorney that's worth his salt that ever going to take a case like that on contingency, which is free for the client and the attorney risks everything. Attorneys only take sure fire cases that they are very confident that they can win and collect on. So when you ask yourself, how do I protect myself from a lawsuit, which you should really be asking yourself is how do I make it look like I don't own it? My name is Scott Royal Smith. I'm with royal legal solutions and I'm an asset protection attorney for real estate investors and I'm a real estate investor myself, and I'd like to help you

[02:16] if you thought this content was good, you have to go see the bigger pockets podcast that I did. It was the top 10 things every real estate investor has to know about asset protection, and you can go listen to it right here.

Asset Protection Means Making Litigation A Nightmare For The Other Guy

Asset Protection: Make Litigation A Nightmare

If anybody looks to sue you, you want to look like you own nothing. You want to make it impossible for them to try to come after you. One of the ground rules of asset protection is that you need to make litigation a nightmare for them.

And what does a nightmare in litigation mean? It means having to risk thousands and thousands of dollars with the mere hope of being able to get something out of the other party.

Now ask yourself, as an investor and as a business person, do you go to gamble in Vegas expecting to win big? Probably not, and neither will an attorney asked to take the case on contingency. Listen, attorneys are in the business of only taking basically guaranteed wins. And we make it such a gamble for them to try to come after your money they just won't do it.

And that's what we specialize in. We make it as difficult as possible at Royal Legal Solutions for anybody to find out what you own or succeed against you in a lawsuit. And even if they were to succeed in a lawsuit against you, their ability to come after your assets would be minimized to the fullest extent of the law.

My name is Scott Royal Smith I'm with Royal Legal Solutions. I'm an asset protection attorney specializing in real estate asset protection, I'm a real estate investor myself and I'd like to help you.

The Only Two Ways to Lose Money Real Estate Investing: Lawsuits and Bad Investments

The Only Two Ways to Lose Money Real Estate Investing: Lawsuits and Bad Investments

[00:08] Real estate investors lose money in two ways. The first is because they actually made a bad investment. The second is because somebody took it from them and they can do that easily through a lawsuit and lawsuits are basically just legalized stealing. So one of the key things that we have to do to guard against half of the way that we will lose our money in real estate investing through litigation is protect ourselves from that. That's what an asset protection strategy is. A proper asset protection strategy protects you from those lawsuits. It protects you from anybody looking to try to sue you. Now when we look at how does that do that is because if your assets are held properly and compartmentalized inside of an LLC structure, it greatly diminishes somebody, his desire to want to sue you. We do this because we start taking them into the deep waters.

[01:04] We start exhausting their will and their resources to fight because if we make it look like you don't have much to come after and we make it look like it's very tough to get to and it actually will be very tough again, then the person on the other end of that says, how much am I willing to invest and put up my hard earned dollars with just the hope or the chance that I might be able to get something out of it? Most people won't put their hard earned dollars on a gamble just like they were going to Vegas to go for a lawsuit, and in fact the last, the attorneys to take the case on contingency. Well, what I can tell you is that attorneys are only taking cases on contingency because they believe that it's going to be an easy win for them because that's their business and we make it a gamble or somebody to come after your hard earned dollars and your real estate investments. The reality is is that it won't make business sense and they just won't do it. My name is Scott Smith and I'm an asset protection attorney specializing in real estate asset protection. I'm a real estate investor myself and I'd like to help you

[02:28] if you thought this content was good, you have to go see the bigger pockets podcast that I did. It was the top 10 things every real estate investor has to know about asset protection, and you can go listen to it right here.



This might sound strange to you as a real estate investor, but you're in one of the most high-risk industries in the United States. The United States is already a very litigious country, and real estate is the most litigated of all of those industries. You're exceptionally at risk if you hold any assets in your personal name. What we specialize at Royal Legal Solutions is making you what's known as judgement proof. That means if anybody sues you, they get nothing.

LLCs Can Protect You From Issues That Insurance Refuses To Acknowledge

LLCs Can Protect You From Issues That Insurance Refuses to Acknowledge

[00:08] The truth is is there's a lot of that information when it comes to real estate investing and how to protect your assets, whether it's Joe Lucky, the keyboard warrior from an internet form or your CPA or the worst case scenario, a general practitioner that thinks he has a clue about what it means to be a real estate investor. If they tell you that all you needed shirt is insurance, they are wrong and Sherman's protects you from different types of claims than an LLC does. Let's take for example a case that I had a client a, it wasn't a slip and fall on her front porch. It wasn't that a, you know, somebody had a simple case of negligence and the management of the property. Well those would be things that insurance would cover and hurricanes is that she remodeled the house and she replaced the plumbing underneath the house.

[01:02] The buyers asked her in an email, what plumbing underneath the house did you replace? And her response was all of the plumbing in the house had been replaced. Come to find out three months later after the sale that there was a leak. In the plumbing resulting in tens of thousands of dollars to damage because the buyers at that point, we're out of town. Well, what do you think happened? Well, a loss of habit because the buyers were saying that your email was intentionally fraudulent. When you told us that all of the plumbing in the house had been replaced. This isn't a case of a seller who was intentionally misleading a buyer. This is a case that happens with almost all losses. It's a misunderstanding. You don't have to be a bad person to get sued. All you have to have is a misunderstanding. Luckily for my client, Jen, a proper asset protection strategy in place with a series of little seat that allowed us to negotiate the very advantageous resolution to the case. In fact, that particular case, we were able to get completely drunk. My name is Scott Smith. I'm an asset protection attorney specializing in real estate company structures. I protect my clients and make them judgment and I'd like to help.

[02:32] If you thought this content was good, you have to go see the bigger pockets podcast that I did. It was the top 10 things every real estate investor has to know about asset protection, and you can go listen to it right here.

Protect Yourself from Swimming Pool Liabilities

For those that don't remember, we're going to start with a real case that was all over the news. You may have even heard about it at the time.

We're doing this to make some general points about the risks all pool owners face. Being rich and famous won't save you from an improperly maintained or managed pool. It sure didn't help Demi Moore.

Swimming Pool Lawsuit Case Study: What Happened to Demi Moore

Demi Moore’s assistant had a pool party in 2015 at Demi Moore’s California home where alcohol was served. Somebody drowned. It was an unfortunate accident and Demi Moore, who wasn’t even at the party, was quickly swimming in litigation. 

It sounds so ridiculous it could be the plot of one of Demi’s erotica thrillers.

There are carefully outlined state safety regulations that you have to comply with if you don’t want to end up on the witness stand with Tom Cruise screaming at you. In most states you are responsible for keeping your pool reasonably safe.

It doesn’t matter that it was Demi’s assistant who held the party. Demi owns the pool. Demi is responsible.

Understanding How Swimming Pool Lawsuits Happen 

There are two ways you can be considered too lazy, cheap or careless to own a pool under the law:

#1 You violate a local pool safety law

In this case, you’re strictly liable, like Demi Moore.

The solution here is simple. Bring your death trap up to code. Find out what the law is and comply. Build a fence and put on a pool cover. These are the basics.

# 2. Your pool is deemed “unsafe”

This is trickier, from a liability standpoint. Broken fences, rusty nails, lack of depth markings, and more can make a pool unsafe. Once again, this varies, but I’m sure through the use of the computer you are using to watch this video, you can figure out your local regulations. Better yet, contact an asset protection attorney to help you understand them.

Here’s another issue, and this one is key. If you party by your pool and your friends enjoy drinking cocktails, you may want to consider hiring a lifeguard for the afternoon. Preferably a sober lifeguard.

It’s a small expense that may keep somebody alive. If the conditions at the party are deemed unsafe (SEE: Rooftop cannonball championships) you might be on the hook.

Remember, like Demi, you might be liable even if you are not at the party so be sure that there are safety measures in play. It’s the summer time, so party hard. Just don’t end up paying for it.

In short, if you own the pool, you are responsible for its compliance with safety regulations. Landlords must keep this in mind when considering tenants. But you also have to make sure that everything you own is up to those same safety standards. Sorry fellas, but it’s not all collecting rent checks. Even trespassers can hold you liable if they get hurt in your unsafe pool.

How to Prevent Swimming Pool Lawsuits

Here’s a short summary of what you need to do if you want to avoid fishing dead bodies out of your pool and the costly lawsuits that come with it.

1. Comply with all safety requirements for your city and state. If you can’t afford them, you can’t afford a pool. But you’re a good little saver. Maybe next year.
2. Include a clause or separate pool disclosure and waiver. This is a tip for landlords or investors with rental property. Taking a few minutes to do this could save your ass in court. That way if some fool wants to work on his swan dive after his tenth martini, he’s already assumed the liability at least in part.

Your waiver should include the following:

Asset Protection with Royal Legal Solutions Can Keep You Above Water

Losing your investment, as noted above, is terrible. Losing your house is much worse. When it comes to owning a pool, be PROACTIVE with your liability before you have to be REACTIVE to a lawsuit.

Yes, there is work, responsibility and expense here, but you need to own a pair of big boy trunks before you go swimming in liability. Royal Legal Solutions can help you address legal matters relating to  your pool and construct an asset protection plan that keeps you out of court. If you would like advice on how to navigate this issue or begin protecting your assets like the pros, send us a message take our quick investor quiz for landlords and investors.

11 Crucial Questions You Should Be Asking Before Investing

You probably already know that investing can be a risky business. Some people make it big. Others lose everything. There's always going to be those wanna-be Bernie Madoffs to watch out for.

So before you invest your hard-earned savings or your self-directed IRA into someone's business or real estate, you need to ask questions either to yourself or the person/business receiving your money.

We're here to encourage you to have a healthy level of skepticism. Anyone asking for your money should be comfortable answering questions. Let's go over 11 tips & questions to help you avoid legal trouble and bad investments.

Top 11 Questions You Should Ask About New Investments

  1. How does this investment fit into your portfolio?

    It's important that you diversify your income to maximize your returns and protect yourself against any unforeseen economic shocks.

  2. Are you being pressured to invest?

    If you are told that this opportunity will pass if you don’t invest now, then let the opportunity pass. Most scams use this technique.

  3. Have you been given documentation?

    If you aren’t given documents outlining what has been explained to you in conversation or what has been put into a presentation then don’t invest.

  4. Do you understand how you will make your money back?

    If you don't understand how the business or investment makes the returns being promised, then don't invest.

  5. Have you been offered commissions?

    If you’re told that you can get a commission for bringing others to invest into the same company, be skeptical. Especially if you don’t have a license to receive such commissions then don’t invest. If they're willing to break the law, they're willing to screw you over.

  6. What's going to happen to the money you loan them?

    If you are loaning money for a real estate venture, then get a deed of trust or mortgage on the title to the property protecting your investment. Also, make sure that you get a copy of the title report or commitment showing what position your loan is being placed into when the deed of trust or mortgage is recorded.

Lenders: Do What the Bank Does.

Create lending instructions to the title company closing the real estate transaction. Tell the title company to only use the funds being loaned when the borrower signs the note/loan documents and when all other defects to title have been cleared or disclosed.

  1. Have they filed with the SEC?

    If you’re investing into a PPM (Private Placement Memorandum) or offering you should receive lots of documents outlining the investment, the use of funds, the background of those managing the company, and also documents regarding your rights as an investor.

Also, check to see if the PPM or offering was properly filed with the SEC by going to SEC.gov and checking the company name in the SEC database. If no filing record exists for the PPM or offering with the SEC, then the person raising the funds has possibly disregarded the law. They'll probably "disregard" your money next!

  1. Are they credible?

    Investigate the background of the person you are entrusting your money with. When you are investing with others, you need to think like the bank and do what the bank does.

What is this person’s credit history, employment or prior business experience? What's their plan? What are the terms of the investment? Is there a realistic rate of return that fairly recognizes the risk being taken? Remember, the person who has your best interest at heart is you, so be vigilant.

  1. Have you looked closely at the documents provided to you, if any?

    Make sure a lawyer representing your interests reviews the documents. A second pair of eyes always helps. If a lawyer drafted the documents already it is still important to have a lawyer look at the documents as they relate to your interests and with an eye towards protecting you.

The "small print" in investing can be tricky. Many investments have clauses that can impact your ability to get your money back. Some even give the company raising the money the ability to pay whatever compensation to themselves they desire, which will eat into the bottom line of your profits. If you don't know what you're looking for, find someone who does. More on that in a moment.

  1. Have you sought a second opinion?

    Seek the opinion of another investor, business owner, or friend whose opinion you trust. Sometimes when you explain the investment to someone else they can help you find issues to consider and questions you should be asking.

  2. Are you willing to lose the money you're thinking about investing?

    Be comfortable saying no and only invest what you are willing to lose. Just like you would in Vegas.

Sometimes you may need to get out of your comfort zone by asking lots of questions, by demanding additional documentation, or by simply saying no. Remember, you are the only authority on what types of investments are best for you.

Of course, you're also human and flawed. It's best to seek professional advice if you're uncertain about an investment for any reason. At Royal Legal Solutions, our attorneys are investors themselves. If you need a second opinion, an extra pair of eyes, or assistance managing your investments in a corporate structure, start with our investor quiz and we'll take it from there.

Defamation and Bad Reviews: How To Protect Your Business & Personal Reputation Online

You've no doubt seen negative reviews and comments about someone or a business online, maybe even one about you or your own business. A single 1 star Yelp review can quickly spiral into every business owner's worst nightmare. Today, we're going to discuss the current digtal climate and how to manage your reputation in the face of negative reviews. Specifically, we'll talk about when it rises to the level of something you can sue for: defamation.

Can You Sue Over False Bad Reviews?

As review platforms such as Yelp become more and more popular, many businesses are experiencing false claims and defamation on a scale they've ever seen before. The good news is that you can do something about it to protect your business.
You may or may not know, but there's no shortage of lawsuits about posts people make about businesses. There have been hundreds of lawsuits over online reviews or comments about businesses that have resulted in legal action. Let's talk about how this happens and what to keep in mind.

  1. Was the Statement False?

The 1st amendment guarantees only the truth, not lies. Most people in the United States think they can say anything they want, but that simply isn't true. Especially on a website like Yelp, LinkedIn, or Google+. When it comes to a customer review, if it's negative AND untruthful, then you can sue for damages.
Any case brought to remove or silence a negative comment or review must allege and prove that the comment is not truthful. If the comment or review was the truth, then there is nothing legally that you can do to force the other person to remove or correct the comment.
I would add that, the easiest way to deal with an "unsatisfied customer" is to approach and calm them down. Don't ever NOT respond to negative feedback, that makes it look even worse.

  1. Is It Really Defamation?

If the information posted about you or your business online is untruthful, then the legal action you may bring against the fraudster is called defamation.

There are two types of defamation:

What Do you Have to Do To Win a Defamation Lawsuit?

In order to win a defamation lawsuit you must show the following:

  1.  That a statement was made.
  2.  That it was published for others to see (comments, reviews, etc).
  3.  That the statement caused you injury ( emotional distress, loss of business, etc).
  4.  That the statement was false.

Awards in a defamation suit generally consist of the removal of the false statement(s) and damages for the amount of lost profits or injury that was caused. While lawsuits can remedy harm caused to you or your business, they are also costly and take a long time to conclude.

The Smart Way to Handle Bad or False Reviews

If someone does post an untruthful or negative review, respond to it once and only once. Never argue with someone in the comments or reviews section. There's no way someone reading that will be able to tell who is lying and who isn't.
As long as you reply once, that shows that you as a business owner care, and that's what's important. If you can, reach out to that disgruntled customer via phone or email.
If you’re unable to resolve a negative comment or review and if that comment or review is false AND is causing you or your business injury, you can bring a lawsuit against the perpetrator.
Just remember, a lawsuit can be a long and costly process, so don't go down that road unless it's worth it. If only your feelings were hurt, or if the statements were mostly true, then don’t waste your time with a lawsuit as it won’t be worth the legal fees.
Most lawsuits are just not worth it. But if you think yours might be, there's only one smart thing to do. Schedule a consultation with an experienced and knowledgeable attorney.