When acquiring commercial property, the manner in which you take title can affect your ownership rights, obligations and liabilities. One of the most important factors when owning commercial property is ensuring that you are protected from liability exposure. Read on to learn the benefits and disadvantages of each form of commercial property ownership.
Should I hold commercial property in my own name? In most cases, the answer is no. Holding title to property in your personal name has some significant drawbacks. This form of ownership does not shield the owner from liability in the event a lawsuit arises in connection with the property. If someone sues you for conduct relating to the property, the claimant can try to recover your personal assets. The property owner can obtain insurance to protect himself, but this may not provide adequate assurances for most people.
Should I hold property through a limited liability company (LLC)? An LLC has the advantage of providing a commercial property owner with liability protection and certain tax benefits. Unlike a corporation, an LLC is not subject to double taxation and may be receive a lower tax rate than corporations at certain income levels. An LLC is also a good choice because it is administratively simple, requires fewer formalities, and is ideal for small businesses.
Can I hold my commercial property through a corporate structure? A corporation provides similar liability protection, thereby shielding personal assets in a lawsuit related to the corporation. But maintaining a corporation requires adherence to a number of corporate formalities. These requirements are significantly more onerous than those involved in maintaining an LLC. In some cases, a corporate structure is appropriate for a commercial property owner. This might be the case if the owner’s intention is to attract financing from investors, for example. But in most instances, holding the property through an LLC is the most sensible choice.
If you take ownership through either an LLC or corporation, it is important to remember that liability protection is not guaranteed. It is the responsibility of the owner to maintain records and finances completely separate from his own personal financial matters. The owner should take steps to ensure that the entity holding the commercial property functions as a totally distinct legal entity.
The experienced team of attorneys at the Law Offices of Mark Weinstein, P.C. can help you litigate your real estate claims. Contact Mark Weinstein and his colleagues at (770) 888-7707 or visit them at http://www.markweinsteinlaw.com to find out how they can advise you.