Montgomery Real Estate LLC Lawyer: Assisting Real Estate Investors & Commercial Property 

 Posted on March 06, 2023 in Real Estate

This article will discuss business entities for real estate investors, landlords, and commercial property owners. The most popular business entity is a limited liability company, an "LLC." The LLC is a method to insulate a business owner's assets from business creditor concerns. The LLC provides limited liability protection for its owners by limiting a business creditor's reach to business assets versus the personal business assets of its owners. Business owners are concerned about limited liability protection and protecting their assets from a creditor's lawsuit.

As a general rule, the LLC provides liability protection, which limits a creditor's remedies to the business assets of the LLC. Plaintiff's lawyers understand the benefits of an LLC's limited liability protection and make their living finding a strategy to go after a business's owner's assets. 

There are several strategies that creditor rights lawyers seek to recover losses for their clients. The Illinois Consumer Fraud and Deceptive Business Practice Act ("Act"), 815 ILCS 505/1, et seq., is legislation, which is intended to protect individuals, consumers, and businessmen against fraud, unfair methods of competition, and unfair or deceptive practices in the conduct of a trade or business. This legislation is used broadly by creditor's attorneys to go after a business owner's assets in case of a judgment. The threat of litigation will often result in a settlement in a creditor's favor. In addition, this legislation grants punitive damages, reasonable attorney's fees, and court costs as damages that a Plaintiff can seek. 

Setting up an LLC makes it much more difficult for a creditor to expose the assets of business owners. A business owner failing to incorporate their business or real estate holdings makes it easy for creditor lawyers to collect on their judgments. In contrast, the LLC's limited liability protection forces lawyers to frame their lawsuits novelly. A business owner choosing to incorporate their business is a wise decision.

Pending Recession: Advanced Business Structure Planning is Critical

At Gateville Law Firm, we employ advanced business structure planning strategies for real estate investors to maximize their asset protection. Liability protection is critical because it differs between a nightmare and a headache. Generally, we recommend that a business owner's interests be owned by a business entity, which provides further liability protection versus owning real estate holdings in one's personal or family's names. 

With a pending recession, lawsuits increase velocity because people strategically default. Unlike residential loans, real estate investors often obtain loans from hard-money lenders, with unfavorable terms such as high-interest rates and lack of redemption periods. Real estate investors that utilize land trusts and other strategies to protect their assets are provided peace of mind. Bankruptcy offers limited protection and has income limits, which limits the pool of individuals that can utilize a chapter 7 bankruptcy. Advanced business asset protection planning provides a disincentive for a creditor to sue landlords. Creditors' lawyers desire to see desirable targets where judgments case be turned into cash. A real estate investor that has employed an asset protection strategy limits the risks that a creditor will pursue you.

Land Trust Combined With an LLC is an Excellent Asset Protection Strategy

A private or " land trust" is an asset protection strategy to protect property owners from liens and judgments. The primary benefit of a land trust is the prevention of liens and judgments being placed on real estate property that is placed in a land trust. Investment or commercial real estate is often put into the land trust's name, with an LLC as the beneficiary of the land trust. This combination of ownership of a land trust and LLC as the beneficial owner of the land trust provides a strategy that limits a lien from being placed on the property and the limited liability protection of an LLC.

There are two forms of an LLC in Illinois. The first form is a member-managed LLC, which the members or owners of the LLC run. The second form of LLC is managed by the managers, which the members or owners appoint. An LLC is operated similarly to a corporation, where the select shareholders' managers run the corporation's business affairs. The significant difference is the two who run the day-to-day affairs of the business. A manager-managed LLC allows a business lawyer to further increase asset protection by protecting one spouse's income and assets from the creditor. 

Real Estate LLCs: Montgomery Real Estate LLC Attorney

Real estate investors, landlords, and commercial property owners must be concerned about business asset protection. Here at Gateville Law Firm, we specialize in asset protection for real estate owners. Unlike most attorneys, we are versed in real estate, business, estate planning, and asset protection law. Most real estate attorneys need help understanding asset protection because they need to be better versed in trusts and business entities. 

We can assist you and an LLC's members in drafting a well-drafted operating agreement. An operating agreement is a written document explaining the roles and responsibilities of the members and managers of an LLC. Multi-member LLCs require an LLC operating agreement to minimize conflicts and disputes. Generally, partnership and membership conflicts are likely because litigation often arises among close friends and associates. Call Gateville Law Firm today at 630-864-5788 or contact us through our online contact form.