How Should I Separate My Personal Property From My Real Estate Investments?

Separating your personal property from your investments is absolutely critical for real estate investors. Ensuring that you do this correctly is important for both saving and making as much money as possible. Also, doing so will ensure your assets are protected.

Fortunately, the law is on your side. Even ice-cold Uncle Sam respects the needs of homeowners. Your home gets certain protections that your investments do not. We will show you below how to take advantage of these protections, establish clear boundaries between your investments, and defend all of your properties with simple legal tools.

Keep Your Home in Your Name

The law distinguishes between your home and your investment properties for a reason.  It may not surprise you that this reason comes down to taxes.

Some investors get so fired up about the LLC or Series LLC structure that they want to protect their home by sticking it in a corporate structure, just as they do with their investments. This is a bad call for two reasons:

  1. You will save far more money keeping it in your own name and taking advantage of the tax benefits, like the homestead exemptions discussed below.
  2. Having your personal home in your SLLC or other structure will "comingle" your personal property with the company.  This is a legal no-no that completely destroys your anonymity and undermines the asset protection properties of the Series LLC.

Know and Exploit Homestead Exemptions

All Americans receive homestead exemptions on the federal level, and 48 of the 50 states offer them at the state level as well. These exemptions are amounts you can claim on your taxes to save you costs related to your home. How much you will save will depend heavily on where you live, but this is fairly easy to research. Of course, our professionals at Royal Legal Solutions are well-versed in this information and are also happy to walk you through it.

However, if you try to use the business strategies for your home, you will almost certainly end up losing access to these exemptions.
 

Use the Series LLC Structure for Your Real Estate Investments

Of course, you could use other business entities as well. A Traditional LLC is just fine for a single property. But if you're even considering growing your investment portfolio over time, level up to the Series LLC. We tend to recommend the Series LLC for real estate investors, primarily because it comes with all the perks and protections of a Traditional LLC, and many, many more. We're so passionate about this tool because it costs the same as an LLC (sometimes less, depending on your state), but offers asset protection, liability, and taxation benefits.

And it gets better: the Series LLC costs exactly the same as the Traditional LLC, but has a host  of additional benefits. The biggest perk for investors is that you have the ability to grow your real estate business infinitely, and create as many Series as you like--and you won't pay a penny more than you would for a Traditional LLC. Essentially, you're getting an infinite amount of LLCs for the price of one. Not all LLCs are equal:  the best states to form your Series LLC in are Texas, Delaware, and Nevada.

Ensure You Are Banking Properly

Use personal accounts for matters related to your home. As discussed above, you want your home in your name. So you want to treat any expenses related to your homestead as personal expenses. The best way to ensure the lines don't blur between your own house and your investment properties/corporation is to keep absolutely separate accounts for both.

If you're making a real estate transaction, or an expense related to your rental property, you will want to use a business checking account. The owner of the account isn't you--it's your corporate structure. This will ensure you have the legal standing to prove they are separate entities, should you ever find yourself in court.

Don't worry, you can still pay yourself for your rental properties. Just make sure you're doing it correctly. Check out our play-by-play on how to pay yourself from your LLC structure for more details.


Bottom Line: Separate Business and Pleasure

The old axiom is true. Think of your home as your pleasure palace, and your investments as your business.

We're here to help you set up your Series LLC and everything else you need for a bulletproof asset protection plan. Keep those money-hungry attorneys at bay: take action and set up your $150 consultation today.

Investment Structures That Avoid California Tax Requirements (Video)

You're from California. You know that your state loves to tax, especially when it comes to LLCs.  Knowing how to avoid California's franchise tax is an important part of your asset protection strategy.

You have to pay $800 per year and franchise tax per LLC. This is true even if you live in California and you have a Texas LLC that only owns Texas property. You could still be subject to the franchise taxes.

One solution to this may be the Delaware Statutory Trust.The Delaware statutory trust is a trust structure and assets is not subject to the franchise taxes as the rules currently are defined by the franchise tax board. The Delaware Statutory Trust or DST is an entity that is formed in the state of Delaware and can have a series structure just like a series LLC.

Keep more of your money with a Royal Tax Review

Find out about the tax savings strategies that you can implement as a real estate investor or entrepreneur by taking our Tax Discovery quiz. We'll use this information to prepare to have a productive conversation. At the end of the quiz, you'll have an opportunity to schedule your consultation.    TAKE THE TAX DISCOVERY QUIZ

Delaware Statutory Trust Advantages: Protect Your Assets Like the Pros

The Delaware statutory trust (DST) is a tool wise real estate investors use to avoid the dreaded franchise tax that eats into the profits of LLCs. The California investor, in particular, enjoys advantages based on two concepts:

  1. Insulating the assets and keeping them separate from one another by using a shell company
  2. Masking the assets from any provable relationship between you personally or the shell company.

There are even more good reasons to use this structure. Delaware Statutory Trust advantages also include:

The beauty of this structure is all the effort is up front. Once it's in place, you'll barely even know it's there and you can go back to business as usual.

What is the Best Type of Company For Real Estate Investors in California?

As a real estate investor, you have several options for your company structure. But we've found the best for asset protection for the California investor is the Delaware statutory trust. Note: investors from any state can take advantage of this tool, but California state restrictions on business make it ideal for Golden State residents. 

A simple way to understand the DST is to compare it to a parent and its children. The DST itself plays the role of the mother and father, rolled into one.  Unlike human parents, Octomom notwithstanding, it can reproduce forever. In this case, the children are referred to as "Series." Despite the fact that the DST is its own legal entity with a single filing and tax return, each child receives the same protections as a traditional LLC. This includes, of course, liability protections. This image gives you an idea of how this works:

delaware statutory trust advantages

As you can see, each Series can contain one or more assets. Creating a new Series is simple and can be done in a matter of minutes. For a more detailed explanation, take a look at our piece on the Series LLC Structure. The same information applies to the DST. Its structure is similar to that of the Series LLC.

How Does the Delaware Statutory Trust Stop Lawsuits?

The DST stops lawsuits by sapping any motivation an attorney would have to file one at all. Further, it places a nice, clear boundary on how much a litigious person could collect from you in court.  What does this actually look like?

Well, when you use a DST structure, even if someone does sue you, they're only able to "go after" the relevant asset in the Series.

Let's say an angry tenant tries to sue you for a problem related to your rental condo in Series 1.  Even if he/she is successful, only the condo is on the line. Your other assets in Series 2, 3, and the Holding Company are safe—and so is anything you own personally.

Believe it or not, this is actually the worst-case scenario. A well-implemented DST will kill the suit before it's even filed. This comes back to the motivation issue mentioned above. Think about it: what motivation does anyone ever have to file a lawsuit?  You might think of things like indignant rage, pure spite, etc., but the only motivation that matters for attorneys is cash-money. Or valuable assets that can be converted into cash money.

Even if the person initiating the suit is madder than hell, few attorneys will play ball if they have nothing to gain from winning. Believe me, as an attorney, I have much more profitable ways to spend my time than chasing after someone who doesn't have much for me to recover in judgment.

This is why my asset protection strategies attack recovery. It's easy enough to win a judgment, but on its own, it's like getting a gold star from the court: nice ego boost, but ultimately worthless. If the gold star is just a sticker, it actually costs the attorney precious and expensive time to pursue you. The gold star is only good if it's backed by actual gold, meaning, a valuable asset to convert into the cash we all know and love.

Roll with me on this: would you spend time researching a project at YOUR job that you weren't sure you're getting paid for? Hell no! Attorneys are even more hawkish than the average professional in this regard. We aren't going to waste money investigating you, let alone waltzing into court to sue you, if it's going to cost us more than we could win. There are many, many more tasks that we can bill for and receive certain payment. Without representation, even the most vindictive plaintiff doesn't stand a snowball's chance in hell of winning the judgment.

How Does the Anonymous Trust Play Into An Asset Protection Plan?

Anonymous Trusts help you drive home the point that you aren't worth coming after. Their job is to disguise the ownership of the asset in the first place. These Anonymous Trusts will ultimately hold the assets.

Remember the research phase that comes before any lawsuit we discussed above? Find out how to form an Anonymous Trust and it will more than pull its weight in your asset protection plan. In the internet age, it's pretty easy to figure out who owns a piece of property. County Clerk records are public record, and list the owners of a given property. Anyone with an internet connection can search these.

Usually, these records will clearly show the name of the owner of the property.  But if you use this strategy, the trust's name will be listed instead. And you can name that trust whatever you want. So when anyone, including a potential opposing attorney, goes to research the property, they'll see it is owned by "The XYZ Can't Find Me Trust" rather than a person. Your name is kept out of the whole affair. And to file a lawsuit, the litigant needs a name.

Where Do I Come in if the DST is Holding My Assets?

Trusts, including the example  "XYZ Can't Find Me Trust" are made up of several  parts. This is the DST Structure:

Parent = Delaware Statutory Trust

Child = Individual Child Series of a Delaware Statutory Trust

Land Trust = Living Trust that holds title to the real estate

Ordinarily, the trustee and the beneficiary cannot be the same person. The use of the structure outlined above keeps you, the individual with a name, from being both. Instead, the legal structures you control stand in. So your interests are represented regardless. Even if the trust itself is scrutinized in court, the worst-case scenario is that the trust is "merged." When this happens, your assets just return to the original DST.

How Does Bookkeeping Work for My DST Structure?

Proper record-keeping and vigilance on your part is essential for preventing the DST from being compromised. In legalese, this is called "piercing."  When a court pierces the structure, it can dismantle. You don't want that, because it would allow the court to treat all of the Series as one, instead of separate.

The DST must abide by several legal requirements. These include a valid trust agreement, initial and current filing with Delaware, a Delaware Registered Agent, and keeping in line with laws and IRS regulations governing the structure.

Our firm takes care of the trust agreement and ensures your DST is complying with these requirements. But you have a part too. Your job is to maintain accurate and responsible records.

Record-keeping for the DST structure is simple, and you're most likely using a structure that works if you err on the side of traditional bookkeeping methods. The DST structure above will require you to stay on top of the books for each individual Series. Remember, the power here is in the fact that you are treating them as separate companies. This means separate bank accounts, as well as treating them as different in your bookkeeping software. Generally, this just means identifying any money flowing in or out as belonging to that particular Series in your accounting software.

How Do I Set Up My Delaware Statutory Trust?

We've got you covered. Royal Legal Solutions provides comprehensive Delaware Statutory Trust and Anonymous Land Trust services. As an attorney and investor myself, I founded Royal Legal Solutions to help investors like you. While I specialize in asset protection, my other practice areas include estate and retirement planning. Over the years, I've helped many clients set up DSTs and Anonymous Trusts to establish a solid foundation for their asset protection plans.

If you're ready to get started, take our Financial Freedom Quiz where upon completing it you will have to opportunity to book a consultation. Together, we can build your real estate empire into a judgment-proof fortress.

Delaware Statutory Trust Act: How to Buy an Airline at No Risk!

This is article may appeal to the amateur historians and aspiring empire builders in all of us. We're going to break down the Delaware Statutory Trust (DST) in a fun way: by explaining how you can use one to buy an airline at no risk. But first, a little legal context is necessary. We'll make this relatively painless.

"Common Law” was conceived with the Magna Carta 800 years ago.  80 years later it was born and given the name that evolved into the foundation for our U.S. Constitution, our court system, public policy, and Western Thought.  Over the past centuries, the simple and obvious concepts of justice – “what is right” - have been complicated by the invention of the printing press, the Industrial Revolution, universal suffrage, the Internet, politicians, and (coincidentally?) the need for indoor plumbing.

“Common Law”, after so much time, has yet to keep pace with society, technology, or commerce. Much like “common sense” or “common knowledge,” many laws are reduced to the individual opinion or interpretation of well-spoken lawyers, sympathetic judges or random jurors.  “Common”, when shared by anyone and everyone, quickly loses its value and becomes impotent.

Background and History of the Delaware Statutory Trust Act

“Common Law” in the U.S. had, for many years, prohibited corporations from investing in real estate ventures.  Massachusetts first recognized the concept of a Business Trust (MBT) in “Common Law”.  Because corporations were prohibited from active trade or investment in real estate, the laws were easily changed with a bit of wordplay.  As usual, in 1988, Delaware again exhibited its “business-friendly” reputation and proved why the state has more business registrations than residents.  What was the “Massachusetts Model” was improved, “codified” (put into writing), and is now commonly referred to as the “Delaware Statutory Trust Act” – or DST, for short.

There are significant similarities between a DST and an (S)LLC, Corporation, LLP, and other alphabetically “bankruptcy remote” structures that offer varying degrees of tax benefits, conservation of assets, limited liability, and anonymity.  There is one critical, primary, the distinction between a Statutory Trust and more traditional, more familiar organizational structures. DSTs were created to circumvent “Common Law” related to corporate involvement with real estate.  Corporations are “businesses”.  DSTs are not.  There are no Articles of Incorporation, required shareholders’ meetings, minutes to be recorded, or periodic reports (public information) in establishing a DST.

Both can buy and sell goods and services; both can sue and be sued.  Both may or may pay taxes.  But somewhere along the line, the Delaware legislature, the courts, and even the I.R.S. have re-invented the same language and legal foundations handed down from our English ancestors of centuries ago.

Don’t allow the title of this article, or the statutes, to mislead you.  The simplicity, flexibility, and protection of the Delaware legislation are available to residents of any state (or country), not only those who live in Delaware.  Businesses organized under other classifications can also participate.  The only restriction is that the (or at least one) Trustee and Registered Agent have a presence in the state of Delaware.

Common Delaware Statutory Trust Definitions  

1.“Governing Instrument” or “Trust Agreement”

These are interchangeable terms for the same required contract that defines a Delaware Statutory Trust (DST).  Imagine a Super Bowl with a twist: each owner, referee, team, and player are allowed to create a brand new, mutual agreement on any element of the game before the coin toss. Well, subject to the limits of public policy and existing law, participants of a DST have, essentially a blank check in exercising their “freedom of contract”.

Not enough time or space can be spent here emphasizing how critically important this first piece of paper is to the success of any DST enterprise or venture.  Due diligence, comprehensive discussions among all potential parties, and anticipation of contingencies are secondary only to consultation with, guidance from, an experienced, professional, specialist in real estate investment, current and evolving law.

To the extent that written (statutory) law is taking precedence over “Common Law”, those same codes and the courts have been very specific in emphasizing that enforceability of that contract is the primary intent and the highest priority of the enacted law.

2. More on the “Governing Instrument” or “Trust Agreement.”

This information is important enough to be re-read and independently researched by any serious investor.

In subsequent articles of this multi-part analysis, there will be more than enough terminology, with in-depth explanations and treatment:  “(Trust) Series,” “Trustee,” “REIT,”  “1031 Exchanges,” “Beneficiary / Beneficial Owner,” “Fractional Equity,” “Bankruptcy-Remote,” and many other phrases that will impress any guest at the next cocktail party.

Discussions will include numerous advantages, multiple structural variations, explanations of how a single entity can have different Trustees, Managers, and Equity Owners, and – most importantly – specific examples of just how flexible #1 can be in providing safety and anonymity in asset protection.

3. Leveraged Leasing Transactions

These can exemplify the diversity of DSTs, far beyond real estate investment.  Case in point: the financing of commercial airline inventory.  A trust is established to retain the title on the plane(s).  Management of that trust is under a DST. The carrier airline would be a designated beneficial owner, who flies and maintains the aircraft and is responsible for paying the note on the financing.  Obviously, the lender makes money as well.

So, if one of our imaginary planes gets misplaced or stolen, which party would be responsible for replacing the plane?  Well, assuming everyone had operated in good faith, the answer is no one.  The Delaware statute was designed to uphold the sanctity of the contract (Trust Agreement / Governing Instrument), which was designed to protect the respective parties.

In the world of real estate investment, matters can be much simpler.  After all, it’s very difficult to steal or lose a building.

Series LLCs (SLLC) 101: A Primer

Whoever said, “If it sounds too good to be true, it probably is,” wasn’t familiar with a Series LLC business structure, or SLLC.

Real estate investors around the nation are benefiting from this organizational framework. For many investors, the primary appeal lies in simplicity, safety and flexibility. Any nominal drawbacks can be readily addressed, or even proved to be advantageous, with the professional guidance of an asset protection specialist such as Royal Legal Solutions.

Take a few minutes to read the following overview to enhance your business or investment strategies.

SLLC Definitions

Series: 

Another term could be, “child”, “project”, “subsidiary” or “company”.  Picture a honeycomb, as in a beehive, with one or an infinite number of independent “cells”.  For our purposes, the partitions between these “cells” aren’t made of wax, but of solid steel.  Properly constructed, one unit may or may not complement the overall functions of others.  Properly constructed, none rely on others in order to function.  Each is autonomous.

LLC:

Once “series” is affixed, another term could be, “parent”, “umbrella” or “the beehive”. Now the bees enjoy economy and efficiency, but the beekeepers and bears can only attack a single, isolated, “cell”, one at a time.  All the other “cells”, the entirety of the beehive, remain in tact.

The Delaware Model:   

Barely more than 20 years ago, the Delaware Legislature, lobbied by the mutual fund industry, developed the innovative means to reduce duplicate paperwork, transparency, and liability in matters of taxation or litigation.  Presently, at least 16 states, Puerto Rico and D.C. have adopted some form of this legislation.
NOTE: With very rare exceptions, anyone can register a business of any type with any Secretary of State.  Regardless of residency, whether your legislature has adopted the Delaware Model, a variation thereof or none of the above … establishment of, investment in, an SLLC can be available to anyone.

Origins of the Series LLC

There is a unique objective of an SLLC that can provide exceptional advantages compared to a traditional LLC or any other business structure.  As referenced above, back in 1996, Delaware created the vehicle by which a single entity can be managed independently as “one” or operated as an alliance of “many” at the same time.

Texas law is essentially a mirror-image of what many refer to as, “The Delaware Series LLC” … ‘same benefits and advantages, with no requirement for annual renewal fees or paperwork.

Even in states other than Delaware and Texas, there are the same two common denominators.  Existing in the best of both worlds, an SLLC is an LLC with internal departments and an unlimited number of LLC ‘s under one ownership.  There is no distinction as to whether any “member” (“owner”) is an individual, sole proprietor / DBA, corporation, non-profit, partnership, spouse or even human or external LLC.

Some Advantages of the Series LLC

Barring any violation of law, government regulations or public policy, an SLLC Operating Agreement enjoys “maximum flexibility” and “freedom of contract”.  Members have extraordinary latitude in making their own rules and terms.

There is no pre-determined tax rate or business category. In general, membership may be able to elect to file and pay as sole proprietors, partners, corporate shareholders, non-profits or have the SLLC be the taxpayer of record.  Specifically, of course, the entity must be created in a way that is fully compliant while optimally beneficial.  Tax liability of the whole is limited to individual members’ respective risk, gain, compensation or stake as defined by the Operating Agreement.  “Double taxation” (on the SLLC and the membership) is most often avoided.

Contingent upon the state’s “shield laws”, members are generally protected from liability for the acts or debts of the SLLC.  This protection is extended to membership enrollments as few as one.  In the realm of real estate and real estate investment, each property can be treated as separate entities.  One deal gone south, one “slip and fall” lawsuit, should have no impact on the profits of other projects or the members thereof.

The economy of a Series Limited Liability Company is not “limited” to lower tax liability, or the savings in administrative manpower and paperwork.  One filing fee paid to the Texas Secretary of State will put you in business, no matter how many bees or honeycombs there are or may be subsequently added to the hive.  Unlike other states or business entities, to include Delaware, there are no “renewal fees” … annually or at any other time in the state of Texas.

Caveats  

Presently, there are about 15,000 words, about 50 pages and over 600 subsections in the Texas state statutes which govern LLC’s and SLLC’s.  No one can quantify or apply all the associated rules and regulations now in place with federal, out-of-state and foreign agencies.  (e.g., Canada doesn’t even recognize such a legal entity, but Canadians can participate in U.S. SLLC’s.)

Yet consistently, after 2 decades, the innovative “Delaware Model” (Series LLC) appears to be immune to significant litigation or legal challenges.  With only 5% of the world’s population, the U.S. is home to 80% of the planet’s lawyers.  Regardless, we’re still trying to find many legal cases in which Texas, Delaware or any states’ similar laws have even been contested. The only thing better than winning a lawsuit is never having one filed.

Yes, the fundamentals are simple, safe and flexible.  No, they aren’t “idiot-proof”.  Then again, any reasonably smart business owner can avoid any pitfalls:

Series LLC Examples: When Things Go South Legally

There is no business model that provides complete immunity from market reversals, natural disasters, or changes in laws and regulations.  Stuff happens to everyone, in every business.

And when even the best-laid plans of talented and successful business people go awry, the polygamous marriage among companies, creditors, or customers often end up in court.  Unlike holy matrimony or other business models, Series LLCs can protect all parties in advance.

Most often, with the right lawyer as “Best Man” or “Maid of Honor” chaperoning the courtship, the headaches and heartache of divorce court can be avoided altogether.

When The Series LLC Saves The Day: Two Examples

The first comes from real life: the premier, if not only, case in which a federal bankruptcy court upheld the concept and validity of SLLCs and denied a creditor’s attempt to game the system in their favor.  The second is hypothetical, but has real-life implications. After all, “happily ever after fairy tale marriages” are exactly that: fairy tales.

Regardless, all levels of state, local and federal government (courts, legislatures, regulatory agencies, the I.R.S. itself) are interpreting and enforcing myth as reality.  Judges, politicians, and bureaucrats don’t like change. They love inertia, momentum and precedent–campaign speeches notwithstanding.

Example 1: In re Dominion Ventures, LLC, No. 11-12282 (Bankr. D. Del.)

Now, it’s impossible to get two lawyers together without getting lost in a gigantic bowl of word salad or a maze of rabbit holes.  Put them in a courtroom in front of a judge (who’s also a lawyer) and things actually get simpler.  The focus and facts are limited to a relevant Reader’s Digest version.  Legalese will be kept to minimum.

Dominion, a legitimate and reputable group of businessmen, established an SLLC in full compliance with state law.  Both the “parent” company and each of the “children” cells operated independently, maintained separate accounting, and did everything “by the book.” That included using sound business practices.  One thing led to another and Dominion needed some help on credit and cash flow.  “Creditor X” to the rescue!

All that was required was a change in the original Operating Agreement and absolute veto power over all operations and decision making.  Well, the bailout didn’t prevent the boat from sinking and ultimately everyone ended up in Bankruptcy Court.  Now remember, the issues had nothing to do with SLLC legislation. Things just didn’t work out.  “Creditor X” claimed that its after-the-fact position prevented SLLC protection and that all assets of all “children” should be consolidated to satisfy the debt.

Maybe “Creditor X” should have retained a lawyer who had the experience and expertise to advise against the unenforceable loan at the altar.  At the end of the day, the assets of Dominion, its members (owners), and all other respective creditors of the individual “parents” and “children” were protected.

Example 2: Moldy Mary vs. Larry Landlord, (S) LLC

Larry Landlord bought his first duplex just after his graduation from high school.  The property wasn’t much to look at, but it was cheap and he was handy with his hands.  Four years later, a complete repainting of the exterior, and a brand new roof had improved the curb appeal.  The kitchens were remodeled.  The flooring, plumbing, and paneling were upgraded.  Weeds and dirt had been replaced with immaculate landscaping.  Prospective tenants had to get in line on a waiting list.

So, he bought another rental property. And another.  And another. All under the protection, as independent series, of an SLLC.  Tenants clamored for a space in his well-maintained, well-managed rental properties.  As many investors were knocking on the door to participate in the next project.

Eventually, Larry had expanded operations to include 14 properties (and 14 segregated series), to include 5 apartment complexes and 10 members (owners).  Each was fully compliant with state law requirements for documentation, maintaining separate bank accounts, tax filings, and accounting.  Some participants were members of a dozen common projects.  Some had invested in only one.  According to sound business practice, common sense, and the exercise of due diligence, the group hired a a highly reputable building inspector. He gave the building a comprehensive evaluation for each unit.
A sixth property, a high-rise apartment complex costing as much as all other holdings combined, came onto the market and Buster Bankroll contacted Larry.  Knowing nothing about real estate or property management, Buster wanted to invest as an absentee landlord.  Negotiations went well.  Occupancy was at 94% after the first month.

Moldy Mary was one of Larry Landlord’s very first tenants.  She’d been living in the same apartment, owned by a different series, for about 8 years.  A few years previously, after a particularly heavy rainstorm, she’d noticed water spots on her walls and a peculiar smell in her bedroom. The next day, Larry Landlord’s maintenance crew arrived, replaced a section of roofing shingles as well as some interior sheet rock.

Fast forward to 6 months later. Mary got sick. Really sick. So did her husband and three kids. Medical bills exceeded insurance limits. Neither spouse could work and lost their jobs.  The entire family was forced to leave the apartment and move in with relatives.

But to prove a point, when the family contacted Louie Litigator, lawsuits were filed the same day. Multiple, massive lawsuits. Fortunately for Larry and Buster and all other members (including those who owned Mary’s series), the SLLC was on their side.

Based on every legal protections provided to the Delaware SLLC structure only one of the choices below are NOT true.  Let us know which you chose:

  1.  Larry Litigator did an hour’s worth of research and determined that liability lies with only the series that owns Mary’s apartment. He has withdrawn from the case and the “blood-from-a-turnip" strategy.
  2.  The members of the series who own Mary’s apartment have no exposure beyond their investment.
  3. The very specific language of statutes and growing legal precedent will not threaten the assets Buster or Larry or all other members of any and all other series (or Larry Landlords, (S)LLC).

Guess in the comments section below.

Learn More About the Series LLC

Learn more about the Series LLC here on the Royal Legal Solutions website. We've written extensively about the benefits of the Series LLC, and given much more information about how the Series LLC works. We offer many more educational materials on this subject because we believe all real estate investors have the right to be informed. If you're considering forming a Series LLC, contact us for your consultation today. We'll get the job done right, and keep your head above water if things go South!

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.