Understanding How Important Rental Property Liability Protection Is for Modern Investors

Are you a landlord? Do you run your business in a haphazard and lax manner with no regard to how your tenants and other potential litigants perceive you? Are you totally clueless about how to reduce risks and limit personal liability? Then you’re what we refer to in legal circles as a high-profile target. You’re basically walking around with a “SUE ME!” neon sign on your forehead.  To understand the importance of taking a proactive approach towards rental property liability protection, you need to be aware of some of the flimsy and not-so-flimsy reasons that can result in substantial damage awards.

7 Ways You Can Lose Your Shirt Without Rental Property Liability Protection

Disagreements

The number one reason for lawsuits is disagreements as demonstrated by one of our clients. You can do very little to prevent them from happening, even on your best behavior. If you don’t have an asset protection strategy in place, then you might as well hand over the keys to your castle to a complete stranger. We recommend setting up a Series LLC and shell companies to hide your assets from litigants.

Injury on the Premises

You will be held personally responsible for injuries to tenants and guests that occur on your property. If the litigant can prove that the injury was caused by negligent behavior on your part, then you might be in for it.

Dangerous Conditions

Sometimes, it’s not even necessary for the litigant to prove negligence. If they can show that you know, or should have known, about a dangerous condition on your property and you failed to remedy it or give adequate warning, then you will have to pay up.

Vehicle Liability

Any vehicle used by your business including those of employees and agents can result in a claim that can expose your business to a liability. It may have nothing to do with your tenants but you may have little recourse if you have not adopted smart liability protection strategies.

Dogs and Critters

Pets and other animals can also expose you to liability. This is the reason why most landlords prohibit dogs on their property. While you won’t necessarily assume liability for your tenant’s dog, all that the litigant needs to prove is that you “knew” or “should have known” the dog was dangerous or that you exercised some control over it. As you can imagine, it wouldn’t take much doing to prove this.

Security Issues

It’s not your responsibility to protect tenants from criminal acts. However, the law has evolved to a point where it’s possible in some circumstances to take responsibility for the tenant’s security. You’re expected to keep the common areas such as stairways, hallways, and elevators safe from criminals.

Bad Tenant Behavior

You may assume liability for the bad behavior of a tenant. If you are aware of any obnoxious, unlawful or other bad behavior by tenants, you should take the necessary steps to protect the other affected tenants. Failure to do this could result in a lawsuit.

There are plenty of lawsuits based on liability claims that can arise from other sources such as invasion of privacy, libel, slander, and discrimination based on religious beliefs, race, or even evictions.  This is why you need to establish an LLC as the first step towards protecting your investment from liability claims. We can help you come up with an asset protection strategy that will hide your personal assets and make you an undesirable target. 

 

Build Your Real Estate Empire & Asset Protection Plan With the Pros

Welcome to our blog. I congratulate you on taking the time to become the best real estate investor you can be. You've come to the right place to do it! The Royal Legal Solutions blog contains a huge amount of information related to real estate investing and maximizing your profits.

At Royal Legal Solutions, we're here to make sure you have the best tax and legal information to make the most money you can. Not only are we tax and legal professionals, but we're also real estate investors ourselves.

Our specialty is asset protection. We make sure people can't sue you and force you to liquidate your properties. We devise a unique asset protection strategy for your assets to mask your ownership and build an impenetrable legal wall to protect you from lawsuits.

An Asset Protection Strategy Is Essential

You can't expect to last long in the real estate industry without some form of asset protection. And by the way, insurance doesn't count. Insurance won't protect you from lawsuits.

The only way you can protect yourself from lawsuits is with an asset protection strategy. By using a combination of legal structures, such as an LLC, people will think twice about filing a lawsuit against you.
As a lawyer myself, you can trust me when I tell you that few lawyers are willing to try and "pierce" an asset protection strategy without being given a large down payment by a client. And why? Because an asset protection strategy makes you extremely difficult to sue.

It takes time and effort to sue someone with an asset protection strategy. And that's just to be able to file a lawsuit. Winning a lawsuit against someone with an asset protection strategy is a whole different story.
Then even if they do win, they'll get next to nothing in the first place. That's the power of an asset protection strategy, and that's why so few lawyers will be willing to try and sue you if you have one.

Start Winning Today With Royal Legal Solutions.

If you're new to asset protection, we're here to help you learn about it with our many free articles and posts on the subject. For instance, did you know that a good asset protection plan saves your money?

My name is Scott Smith, and I'm the founder of Royal Legal Solutions. I'd like to personally thank you for visiting our website. If you have any questions feel free to comment below, or call us to schedule your personal asset protection consultation.

Lawsuits Are A Money Driven Business: What Real Estate Investors Should Know

 The title of this post says it all. As a real estate investor, you have to understand: lawsuits are a business. When someone wants to sue you, they are only looking for money. To be specific, your money.

How Do I Protect My Real Estate Investments?

You get a proper asset protection strategy.

A proper asset protection strategy keeps people from finding out what you own, and if they ever were to sue you, it limits what they can take. But more importantly, a proper asset protection strategy exhausts their will and their resources to fight you.

This keeps people from continuing with the lawsuit. It usually gets them to settle early and for less. It even gets them, in most cases, to stop the lawsuit before it starts.

What you have to understand is that, because lawsuits are a business, the main question people who want to sue you are wondering is: how do we get money out of somebody when we use them?

This question is answered with a proper asset protection strategy. And you better believe it's the correct one!

How a Proper Asset Protection Strategy Defends Your Assets

A proper asset protection strategy protects your assets from being seized by somebody via a judgement. It makes people (attorneys) believe they’re not going to get anything out of their investment in a lawsuit. This is extremely important.

Because, you see, lawsuits are only paid for in two ways: someone either has to pay an attorney to sue you or an attorney can take a case on contingency. (Attorneys usually take cases like these on contingency.)

Let’s say I’m an attorney who wants to sue you. While researching you, I find out that you have no assets. My research tells me you’ve qualified for food stamps for the past five years.

How much money do you think I’m willing to risk for a judgement which is merely a piece of paper? Without an asset to seize, a judgement is worthless.

Moreover, there’s no attorney worth their salt who’s ever going to take a case like that on contingency. When an attorney takes a case on contingency, that attorney is risking everything. Clients lose nothing.

Attorneys only take cases that they’re very confident they can win and collect on. So when you ask yourself, how do I protect myself from a lawsuit? What you should really be asking yourself is, how do I make it look as if I don’t own anything?

Remember: Lawsuits Are a Business

Well, that’s everything. If you have any questions feel free to ask me in the comments below, I’d be happy to answer  them! Feel free to continue our discussion on this topic or share any of your thoughts on asset protection.

How My Client's Asset Protection Strategy Saved Her From Being Sued

On my blog I've gone over countless ways to protect yourself using an asset protection strategy. But what I haven't done is shown you real-life examples of how asset protection can benefit you, until now.

Get Information From Real Asset Protection Experts

There's a lot of bad information out there about how to protect your real estate investments. You may have seen YouTube videos or read forum posts from people who claim to be experts. T

he thing about the internet is, anyone can claim to be an expert. Even if they've just read a single Wikipedia article on the subject.

You may have even received bad advice from your CPA or an attorney who's a general practitioner in the field. These people will tell you real estate insurance is enough to protect you. But the fact is they don't know. Their advice isn't just wrong, it's dangerous.

Insurance covers things like negligence or a slip and fall in a house. It doesn't cover a lifetime of fraud or breaches of contract. You may think "hey I'm an honest person, I don't need to worry about lawsuits."

But that's not why lawsuits happen.

Understand Why Lawsuits Happen

The majority of lawsuits happen because of a misunderstanding. Take for example a client of mine. She recently bought a house and renovated it. During her renovations she put in some new plumbing because she thought it would add more value to the house.

asset protection case study

Then she went ahead and told the person buying the house how she re-did the plumbing. So they sent her an email asking what plumbing she replaced. She responded, "Well, I re-did all the plumbing in the house."

So they bought the house from her. Some months after the sale there was a leak that caused tens of thousands of dollars worth of damage. The people who bought the house from her threatened a lawsuit based upon her email that said she replaced all of the plumbing in the house.

Now, this seems to be a simple misunderstanding of what she meant in her email, but that was the basis of this lawsuit. I'd like to point out that this is actually a case of intentional fraud, which isn't something an insurance policy would ever cover.

My Client's Asset Protection Strategy Saved Her Thousands

Luckily, my client had the foresight to put in place a proper asset protection strategy, including a series LLC with an Anonymous Trust. Because of the superior position she was in due to her asset protection strategy, they eventually dropped the lawsuit against her.

As real estate investors, we should all be using this type of asset protection strategy. If you have any questions about asset protection, feel free to ask me in the comments below or read more of my free educational pieces.

Are You Ready To Be a Real Estate Investment Pro?

Becoming a real estate investment pro isn't easy. But that doesn't mean it's expensive. There are affordable ways to become a real estate investment pro without having to invest thousands of dollars.

Let's go over those affordable ways below.

Get Real World Real Estate Investment Experience

If you want to get real world experience, the first thing you should do is find the smartest investors near you. Look for investors who are actually doing deals. You'll to find these people at meetup groups or online through websites like biggerpockets.com. You can also find some of my articles with tips for investors while you're there.

And what you're going to look for is somebody that's allowing you to bring money into a deal without having to be a huge stakeholder in any individual project.

This will give you an opportunity to work with more experienced investors on reviewing contracts, vetting deals and looking at tax and legal structures. If you're putting money into a deal with other investors, they have an interest in educating you on why this is a deal that you should put money into.

Not only are you getting a free education, you also have a chance to make money in the process. And sure, you could pay a "guru" to look over a deal with you. Just remember, a guru won't care about educating you as much as someone else who has money on the line.

So even if you're not making money in those first few deals, think of this as the cost of education and real world experience. But let's say you're not ready to invest or work right away. Don't worry, you've got another option.

Get An Education By Attending Real Estate Investment Seminars

If you can't work or invest you should look to attend real estate investment seminars. For example, here in Austin Texas we have the Austin Board of Realtors and other education-based seminars for individuals wanting to learn more about real estate investing.

Seminars are great resources. They're certainly much cheaper in comparison to the thousands of dollars you might have to pay to a "guru" to teach you something. Then there's also the benefits you reap from networking within your local community.

The people you meet at these groups and seminars are real professionals from your community. This is your opportunity to meet with other investors and professionals you can use for other business dealings you're doing.

And the seminars themselves, they're not professional CLD courses. So they're not gonna be over your head in terms of too many buzzwords. The people at these seminars are interested in communicating with you. They won't try to sell you something, like a book or a program. It's just pure information.

The Cost Of Becoming a Real Estate Investment Pro

For the price of real world experience, a valuable education and the chance to network within your community, you're looking at spending about $100. That might seem like a lot, but compared to your return on investment it's nothing.

I hope the above information was useful to you and I wish you good luck on your quest to becoming a real estate investment pro! If you have any questions feel free to ask me in the comments. And don't forget to share this blog with your friends and family on social media.

Learn more about real estate investing,  flipping homes tax free, and building your real estate dream team. I'd love to be a part of your dream team. For personalized legal advice to guide you on your path to becoming a real estate pro, schedule your consultation today.

Protect Your Assets With An LLC & Property Management Company

As a real estate investor, your priority is to get a return on your investment. But if someone, most likely a tenant or other business, files a lawsuit against you, your profits and assets will instantly vanish. You have to protect your real estate assets. If you think you can rely on your insurance to protect them, think again. Check out our previous post on why insurance is not asset protection for details on protecting your assets properly.

Would you believe me if I told you there's a new real estate investment method that not only allows you to protect your investments, but also save money and increase your return on investment?

I'm referring to the traditional, single purpose LLC. My new method is simple. First you form an LLC. Then you put your property in it. For each property you have, you form one LLC.

By doing this you'll be able to limit your personal liability and reap tax benefits depending on what state you form your LLCs in. You can form an LLC in any state you choose. Smart investors "shop around" to find the state that suits their needs best.

Let's say you have two LLCs, each one holding one separate property. Note that you can also use a Series LLC for this purpose.

What Happens To My Real Estate Assets If One of My LLCs Gets Sued?

Only the property held in the LLC which is subject to the lawsuit can be used to settle judgments. And that's only if you lose, which is unlikely with me at your side.

But if you do lose your other property will be untouchable, your credit will be safe and nobody will be able to bring down your mini real estate empire.
Protecting your credit is essential. Without good credit you can't get future financing, which means your days of real estate investing will most likely come to an end. One lawsuit can ruin everything you've worked for.

Then there's your family to consider if you have one. By holding your properties in an LLC, you will protect them from the fallout of lawsuits as well.

Using An LLC Alone Won't Completely Protect Your Real Estate Assets

Do you want the greatest level of asset protection? Consider putting your asset protection strategy on steroids by forming a corporation to act as your property management company.

This property management company is completely separate from your LLCs. And for a good reason too!

Let's say you have a contractor or tenant that would sue you. Or anybody else that's in business with your real estate company who would sue you. They would only be able to sue your property management company, because it's separate from your LLCs.

They won't have a single claim against any of your real estate investment properties. This is exactly what you want. If they sue you and win, they'd be lucky to get their legal fees paid. Learn more about how I can  make your real estate investment assets untouchable.

The Series LLC vs. LLC (Traditional): Which Is Better For Investors?

A limited liability company (LLC) is a popular way for real estate investors and other entrepreneurs to file a business entity. The LLC offers owners more flexibility than other types of businesses entities. As its name implies, an LLC also affords owners limited liability that can protect them from incurred debt or lawsuits.

The Series LLC is a type of LLC that has been around since 1996, originally starting in Delaware. The Series LLC has become popular because more and more states are allowing these companies to operate. Similar to a corporate umbrella, a Series LLC has a “parent” LLC with one or more “child” LLCs that are filed beneath it.

How does the Series LLC stack up against the traditional LLC? Keep reading to find out!

Think of the Series LLC as a Parent-Child Relationship

I know that sounds weird. I'll explain.

Series LLCs allow a company to separate and “box” specific assets into various sub-LLCs to isolate them from each other. If a lawsuit is brought against one of the LLCs,  the assets and earnings of the other LLCs are shielded from legal consequences.

Below the Series LLC, you have the series themselves. You'll have series A, series B, etc. The series are what I refer to as the "children," because they all come from the original Series LLC parent. In this way, the Series LLC looks like a family tree.

Let's say you have one Series LLC, a company you will form in the state of Texas. When you form a real estate LLC in Texas it will be recognized as a legitimate company inside of that state. However, unlike most LLCs, yours will outline special provisions in its operating agreement.

And it is through these special provisions that your LLC will have the ability to become a series and have "children". By children, I mean companies within a company. Separate, yet equal.

With a Series LLC, you're able to create as many "children" as you want. Each child is known as a series. This is a powerful advantage because each series is treated separately for liability purposes, just as if it were its own LLC.

As an investor, it's important that you do this from an asset protection point of view. As the saying goes, "never put all your eggs in one basket". I personally think the Series LLC is better than the regular LLC.

Series LLC vs. LLC: The Similarities

A traditional LLC and a series LLC follow the same formation regulations. Articles of formation, and any associated fees, must be filed with the appropriate government body. Most states also require an operating agreement. Both versions of the LLC protect owners from liabilities. Additionally, they do not limit the number of stakeholders or owners and permit non-US citizens to take part in the company.

Series LLC vs. LLC: The Differences

Compared to a normal LLC, A Series LLC is:

And best of all, you'll be able to file each one of your series (no matter how many you have) on the same tax return. This means thousands of dollars a year in tax preparation savings for you.

How can a Series LLC reduce startup and ongoing administrative costs? For example, if you file for a traditional LLC in Kansas, the fee is $160. If you file for a series LLC, the master will cost $250 and each series will be an additional $100. If you want to protect three separate assets from debt and litigation, under a Series LLC, this will cost you $450. To get the same protection from a traditional LLC, you would need to file three separate LLC entities, for a total of $480.

Another great advantage of the Series LLC is that it receives one EIN Number (Tax ID), which is filed underneath the company name. (You won't have to use a new EIN number for each series you create.) This allows you to streamline your tax preparation so you don't have to file taxes for each individual company.

Series LLCs are not recognized by every state. Those that do recognize and permit the formation of a Series LLC may have varying laws that dictate how to do so.

Other states, like California, do not permit Series LLCs to be formed but do recognize those legally established in other states.

If The Series LLC is Better, Why Isn't Every Investor Using It?

It comes down to risk tolerance.

Some people think if a series was subject to a lawsuit that it wouldn't be recognized in a state that doesn't formally have a law regarding the usage of series. And if a series isn't recognized in a lawsuit, you'll lose all your legal protection. This means someone's attorney will "go to town" on your assets.

Unfortunately, there haven't been many cases regarding the recognition of a series from state to state. But there are a lot of good reasons and precedent suggesting a Series LLC would be recognized in any state. For example, states already recognize LLCs formed in other states.

At the end of the day, a Series LLC is still an LLC.

Is a Series LLC Too Risky?

You can always form a regular old-fashioned single-purpose LLC. However, these are more expensive than a Series LLC if you're looking to separate your assets.

If you know what the LLC costs, you may be wondering how are they more expensive? Well, you have to pay for the tax preparation for each one of those companies at the end of every year. Then you'll get a nice bill for those LLC fees too. You'll have to pay formation fees, operations fees, management fees, and registered agent fees for each LLC you create.

Those fees will cost you about $1000 every year.

In the end, all you can do is weigh your odds and consider the risk. How do you feel about the Series LLC versus the regular LLC? Let me know in the comments below, I'd love to hear your opinion as a fellow real estate investor.

A Series LLC Can Grow Forever

A Series LLC is just like a parent, so it can have as many children as it wants (unlike a normal LLC). And this might surprise you, but just like in real life, these children don't cost any extra money to create. That's true before AND after they're born.

Whereas, if you want to put 10 properties in 10 normal LLCs, you'd have to pay state filing fees for each LLC you form.

Each series in a Series LLC is going to be treated for liability purposes as if it were its own LLC. You can take advantage of this by putting one property in each series/child.

This means if you ever have a lawsuit resulting in some type of action against a house belonging to series A, it won't affect the houses held in series B or C, etc.

I forgot to mention, do you like doing joint ventures? The Series LLC is perfect for doing joint ventures!

For example, series C could be a joint venture agreement with as many people as you would like without involving the other series. It'll have its own EIN number, tax return, and its own operating agreement to conduct the business of your JV agreement.

Need Help Deciding Between an LLC vs. A Series LLC?

Royal Legal Solutions can provide professional guidance to help you make the most of your entrepreneurial dreams. Our staff understands the nuances of state laws throughout the United States and Canada. As experts, our experience can help you avoid accidentally violating the various regulations your company may encounter and maintain your limited liability.

What Does A Nightmare in Litigation Look Like?

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. This is the nightmare which causes the attorneys looking to sue you to lose sleep at night.

Think about all the commercials you see on TV about personal injury law firms. These guys advertise to get clients for these specific type of lawsuit because they know they can win them.

Now ask yourself this. As an investor and as a business person, do you go to Las Vegas rolling dice hoping that you'll recover (money, assets, etc...) ?

Probably not and neither will an attorney. Suing people is usually a gamble for attorneys because they tend to get paid from the settlement. However, in order to get a settlement they have to win.

No attorney is going to try and sue you if they think there's not a good chance of winning. They can't make money if they don't win. Attorneys are in the business of only taking cases that are guaranteed wins. They won't take a case they can't win and they won't dare try to sue you...

At least not when I've got your back. You wouldn't believe how powerful asset protection is.

At Royal Legal Solutions we Take Legal Asset Protection to The Next Level

Attorneys don't like to lose, and when you gamble there's always a chance you might lose. What we do is make it a gamble for attorneys to come after your assets. Most attorneys aren't willing to put in the time and effort to sue you when they know there's plenty of other people they could easily win lawsuits against.

We specialize in making your assets untouchable and intimidating to pursue in court/litigation. You could own a company generating over six figures in revenue yearly, or even millions, and nobody would know except you.

But let's say someone were to win a lawsuit against you. Because of the asset protection plan you have in place (thanks to us) their ability to come after your assets would be next to nothing.

Asset protection involves the use of LLC's, Series LLC's, Anonymous Trusts, and several other legal structures. These legal structures are proven to work, legal and cost effective.

How To Protect Yourself As A Real Estate Investor

The real estate industry is highly profitable. But like all things that come with a great reward, there's also a great risk. And in this industry, you're risking your hard earned dollars.
All it takes is one lawsuit and you're out of the game, permanently. Insurance won't save you. (Surprise: It's not even meant to anyway.)
Let's go over how to protect yourself as a real estate investor.

You need asset protection To last In this industry

You may have already heard of asset protection. If not, you're about to. Asset protection involves using legal structures and smart contracts anytime you do a real estate transaction. The legal structures I'm referring to include LLC's, Trusts, or shell companies.
Using those legal structures, combined with asset protection, allows you to stop lawsuits before they happen. Legal structures do this by first and foremost making you extremely difficult to sue.
It's not that people can't or won't want to sue you. It's just no lawyer is going to want to waste his or her time trying to.
Legal structures will allow you to mask your wealth. You could be worth well over 6 or 7 figures, and nobody would know. And even if they spent time investigating you, they'd realize you're extremely difficult to sue because you're using asset protection.
Think about it. Who's going to sue you if you have nothing of value to offer them? Furthermore, who's going to waste their time investigating you when there's no guarantee that you're even worth investigating? Nobody, especially a lawyer. (I would know, I am one!)

Asset Protection keeps you in the game

Without asset protection, you can lose everything. And no, I'm not joking. Real estate investors lose lawsuits everyday because they didn't have an asset protection strategy in place.

If you plan on owning several properties there's no reason not to get an asset protection strategy. The costs of asset protection are far less than the legal fees and time you'll spend defending yourself against a lawsuit.

You're vulnerable to a lawsuit every time you:

These are all things insurance doesn't cover. The only thing that's going to protect you and your hard earned dollars is an asset protection strategy. Period.
If you have any questions about how to protect yourself as a real estate investor I'd be glad to answer them in the comments below.
Learn more about asset protection.

Real Estate Investor

As a real estate investor, you have to understand that lawsuits aren't a business.
If anybody is looking to sue you, they're looking to get money out of you.
A proper asset protection strategy keeps people from finding out what you own.
If they ever were to see you, it limits what they can get from you.
More importantly, a great asset protection strategy exhausts their will and their 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 lawsuits are a business the main part is how do we get money out of somebody when we sue them?
This is what asset protection strategy fights.
This strategy protects the assets from being seized by somebody via a judgment. This person doesn't believe that they are getting anything out of their investment in a lawsuit.
Lawsuits are only paid for in two ways: Either you pay an attorney to sue or the attorney takes it on contingency.
If an individual is researched and found to have no assets on paper, how much money should you be willing to risk for a judgment?
Moreover, there's no attorney who is worth his salt that is ever going to take a case like that on a contingency. Contingency is free for the client. The attorney risks everything.
In addition, attorneys only accept fire cases that they are very confident they can win and collect on. So, when you ask yourself how do I protect myself from a lawsuit? what you should really be asking yourself is: how can I make it seem as if I don't own anything?
Scott Smith, an asset protection attorney for real estate investors, is a real estate investor himself and would like to help you. 

The Asset Protection Basics: Anonymous Structures & The Shell Company

Asset protection is the art of eliminating your liability and protecting your assets from potential lawsuits. I say potential because once you have a solid plan, nobody will bother suing you. Even if they think they can win. And before any internet ethicists jump down my throat, understand that this is all done legally.
Also, I realize you may already have an LLC. If you think that's all you need to protect yourself, check out our previous piece on why an LLC alone isn't an asset protection plan. Anyway, let's get down to business. Asset protection involves two main things.

Anonymous Structures and Separation of Assets

When it comes to the asset protection basics, anonymity is a cornerstone. We make you anonymous by separating your assets from your operations. This way if your operations become liable, your assets will still be safe.
So how do we separate your assets? By putting them all in one shell company. This particular company doesn't interact with anybody. It doesn't do anything and it has zero contact with the outside world. It's held using anonymous names inside of Anonymous Trusts and anonymous structures. Multiple layers of anonymity protects you and your property from litigation.
Nobody except you will know who owns these structures. Which means nobody will be able to come after those assets in a lawsuit. But of course, we can't talk about the asset protection basics without mentioning the shell company.

Operating Company As a Shell Company

The shell company owns no assets but it conducts all of the business. It's your face to the world. It's the face (company) we want people to sue if there's ever a legal dispute. Yes, you read that correctly. We actually want this to be the target. Think of it as a legal decoy.
In fact, we want to structure our contracts to say that "if we have a problem you can only sue this company." The company we'd list would be your shell company. It sounds simple, but doing it will eliminate virtually all of your liability.
When it comes time to set up your asset protection plan, always think:  assets on one hand; complete anonymity, separation and operations on the other.

Asset Protection Kills Lawsuits Before They Happen

A formidable asset protection plan will always include anonymity and a shell company. Most of the time, this will be an LLC or a Series LLC. I hope you enjoyed my short blog post and video about the asset protection basics!
Are you interested in learning more about how these plans can protect you from lawsuits?  Contact us today to take your first steps towards becoming litigation-proof.

The Land Trust: The Real Estate Investor's Secret Weapon

For longer than any of us has been alive, real estate investors have struggled to prevent lawsuits. And honestly, there is no surefire way to do that. But one of the best ways is using a trust, or specifically, a land trust.

Land trusts are trusts you can use to exclusively hold real estate titles. On their own, they don't protect you from lawsuits, but they can be a critical component of an asset protection plan. They are different from the typical trust because they don't usually involve family.

A land trust is great if you want to remain anonymous. This prevents lawsuits in one simple way. The logic is, if the "other side" doesn't know you own the property, how can they sue you?

Parts of a Real Estate Land Trust

A land trust has three parts. You have a grantor of the trust, a trustee, and a beneficiary. A trustee has control of the property and manages the trust itself.

The beneficiary is the person who receives all the benefits of the land trust (i.e., the income made from the land trust). In some circumstances you'll have to disclose who the trustee of a land trust is. But let's say you don't want to let people know who the trustee is.

For that situation, you can use a nominee trustee. This is a person whose name appears on the trust document. He or she has specific powers which allow them to file tax returns on behalf of the trust. It is the nominee trustee's responsibility to send the tax returns of the trust to the proper tax agency or for filing purposes of the deed(s).

Selling Real Estate From A Land Trust

If someone is looking to actually alienate a property, sell it, or dispose of the trust asset they will want to look at the trust agreement before they buy an asset from a land trust. In that agreement they will see that the nominee trustee doesn't have those powers. Which means you don't have to worry about somebody "running away" with your property. The person who will have the power to sell assets of a trust will be stated in the trust agreement.

The best part is, this person can be you.

If you want to learn more about how land trusts can protect your real estate investments, contact us today. I'd be glad to answer any questions you have.

Title Clouding & How To Avoid It

Time and time again, I've told you how using a Series LLC can protect you and your assets. Today, I'm going to tell you another way you can protect your assets. If you're a real estate investor, you definitely want to pay attention. Get ready to learn about title clouding.

Lis Pendens (latin for "suit pending") much like the name of your high school's prom queen, sounds nice. But it can screw you over if you're not ready for it. A Lis Pendens may be filed against your property if it's involved in a lawsuit.  If someone does file a Lis Pendens against your property, you won't be able to sell it. Not until your "legal problems" resolve themselves anyway. In the field of asset protection, we call this  "title clouding".

Why Should I Care About Title Clouding?

Title clouding is just another tactic enemy legal council will use to put pressure on you to cave in to their demands. It's a strategy favored by lawyers with costly, unreasonable demands. Think about how much money you can lose if you're not able to sell a home you bought just to flip in a short amount of time. What if you need cash and want to liquidate an asset? Title clouding can and will screw you over.

Lawsuits can take years to resolve. All the while, you have to hold on to your asset. At any time one of your properties can get hit with a Lis Pendens and force you to deal with the title clouding that comes with it. Technically, you can still sell your property while it's dealing with title clouding. But who is going to want to buy it when it's the subject of a lawsuit? Think about that question from the perspective of a real estate investor.

If your property does get hit with a Lis Pendens and you end up winning the lawsuit, you can sue whoever filed it for the monetary losses you took as a result of title clouding. And that's where I come in.

My name is Scott Smith. I'm an asset protection attorney based in Austin, Texas with clients all over North America. I'm here to help protect you and your assets from lawsuits.

Call now or schedule your consultation today. Whether you're dealing with title clouding, trying to avoid it, or just need to cover your assets, I'm here to help.

How To Make Your Assets Judgment Proof In A Lawsuit

If you’re a real estate investor, you are at risk from lawsuits whether you know it or not. You may already know the real estate industry is a breeding ground for lawsuits. Now add in the fact that you live in a country where people can sue you for nearly anything.

As a real estate investor, you’re at risk of losing everything: equity, assets, and even your reputation. This is especially true if you hold assets in your personal name.

Did you know that a lawsuit is ranked one of the top three things that people find the most distressing events in their life? Lawsuits rival only with divorce and bankruptcy. The good news is, I can make your risk disappear. This means you’ll be untouchable when it comes to lawsuits.

How, you ask? First there’s something I’d like you to know: the truth about how the wealthy protect their assets.

The Truth About Protecting Your Assets From Lawsuits

The truth is the super rich don’t own assets. They only control them. They do this through a network of LLCs and trusts. These networks protect their assets and allow them to hide them from anybody looking to come after them. You can learn more about how LLCs and trusts protect you from my previous article on the subject.

Imagine the disappointment of anybody looking to sue you when they find out you don’t own anything. Well, at least it will look that way on paper. In reality, you could be worth millions and only look like you’re lower middle class. But the person suing you won't know that.

Who would sue somebody who appears to own nothing? That’d be a waste of time. Remember, the average person doesn’t have the money to pay legal fees upfront. What most people do is split the settlement, assuming they win.

Make Your Assets Judgment-Proof Now Before It’s Too Late

No attorney is going to come after you in a lawsuit if they think they have nothing to gain, pure and simple. But you better believe they’ll see dollar signs when your name starts showing up in  paperwork.

My name is Scott Smith. I’m a real estate investor & an asset protection attorney. I know both sides of the game because I’ve played on both. Give me a call today, and together, we’ll make your assets judgment-proof!

Did You Know Selling Your Property "As Is" Can Get You Sued?

You might think selling your property “as is” offers all-inclusive protection, but it actually fails to dispose several potential legal claims. The reality is that selling a property "as-is" can get you sued. A property with undeclared flaws can land you in hot water for a variety of reasons, including:

Why the As-Is Clause Alone Doesn't Truly Protect You

It doesn’t matter if you were unaware of the defect(s) that later become issues. The buyer decides whether or not to bring a claim, and if they do, you’ll need to defend yourself in court. The mere allegation of fraud can be enough to warrant a trial by jury.

Don’t assume you can automatically settle out of court. Due to the courts' stance on property fraud, litigators incentivize the plaintiff to drag you through litigation.

The True Cost Of 'As Is Property' Fraud

Expect to spend $5,000 – $10,000 minimum in the event of a lawsuit. This is just the cost required to reach a trial: there’s no guarantee you will win. Think of it as a chance, and only a chance, to defend your honor.

When it comes to lawsuits, the losers pay for everything. The first expense is your attorney’s feels (~$10,000). This is followed by the plaintiff’s legal fees (~$10,000). Finally, there are the damages, which tend to range between $5,000 – $15,000 based on average claim costs.

In other words, a run-of-the-mill lawsuit costs up to $35,000. However, a few states allow plaintiffs to take triple damages.

Protect Yourself By Beefing Up Your “As Is” Contracts

This is why a professional asset protection plan makes economic sense. Attorney’s fees from a single lawsuit can offset the cost of your plan.

If you want to take your chances without a plan, then you need to upgrade your “as is” clause. I add the following text to my contracts. It provides several additional layers of protection against claims of property fraud.

My Bulletproof Protection Clause

THE PROPERTY IS CONVEYED AND ACCEPTED “AS IS,” IN ITS PRESENT PHYSICAL CONDITION, WITH ALL FAULTS AND DEFECTS OF WHATEVER KIND, LATENT OR PATENT, KNOWN OR UNKNOWN, AND WITHOUT REPRESENTATION OR WARRANTIES, EXPRESS OR IMPLIED, EXCEPT FOR WARRANTIES OF TITLE AS MAY BE SET FORTH AND LIMITED HEREIN.
GRANTOR MAKES NO REPRESENTATIONS AS TO THE PRESENT OR FUTURE VALUE OF THE PROPERTY OR ITS PRESENT OR FUTURE SUITABILITY FOR ANY PARTICULAR PURPOSE. FURTHER, GRANTOR HAS NOT MADE, DOES NOT MAKE, AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS REGARDING THE ENVIRONMENTAL CONDITION OF THE PROPERTY OR ITS COMPLIANCE WITH ANY ENVIRONMENTAL, POLLUTION, OR LAND USE LAWS AND REGULATIONS, WHETHER FEDERAL, STATE, OR LOCAL. ANY AND ALL PRIOR ORAL OR WRITTEN STATEMENTS CONCERNING THE CONDITION OF THE PROPERTY, WHETHER MADE BY GRANTOR, GRANTOR’S AGENTS, OR THIRD PARTIES, ARE EXPRESSLY DISCLAIMED.
GRANTEE ACCEPTS THIS CONVEYANCE SOLELY ON THE BASIS OF GRANTEE’S DUE DILIGENCE AND EXAMINATION OF THE PROPERTY. THE CONSIDERATION PAID FOR THE PROPERTY REFLECTS THE “AS IS” NATURE OF THIS CONVEYANCE. THIS “AS IS” PROVISION IS A MATERIAL TERM THAT HAS RESULTED FROM SPECIFIC NEGOTIATIONS BETWEEN THE PARTIES. GRANTOR WOULD NOT HAVE BEEN WILLING TO SELL AND CONVEY THE PROPERTY TO GRANTEE UNLESS THE DEED CONTAINED THIS “AS IS” PROVISION. PROVISIONS OF THIS “AS IS” CLAUSE SHALL INDEFINITELY SURVIVE CLOSING AND SHALL NOT MERGE.
IF GRANTEE IS UNCERTAIN ABOUT THE MEANING AND EFFECT OF THIS “AS IS” CLAUSE, THEN GRANTEE SHOULD CONSULT AN ATTORNEY. BUYER’S INITIALS AS TO THIS “AS IS” PROVISION_______

Using this type of language may destroy good will with your buyer, but the alternative is far worse. You shouldn't leave yourself open to a devastating lawsuit just to close a deal. The risk simply isn't worth it.

One of the reasons you want to have an attorney on your side is because you can send tough contract terms and blame it on a third party, leaving your relationship with the buyer in the clear. Don't put your reputation on the line unnecessarily: take action today. Contact us and set up your consultation before you sell your property as-is.