Q: What are liability benefits of holding real estate in an LLC? Could a tenant still go after my assets or other LLC?
I have an LLC that holds a Brooklyn residential property. I have an LLC that holds a South Carolina property. Let's say that a resident of the Brooklyn property sues me, receives a money judgment and exceeds the insurance payout. Would they be able to go after the equity in my LLC (that holds the south Carolina property)? Would they be able to go after my personal assets (checking account, stocks, etc.)? Or are they just confined to suing the LLC that holds the Brooklyn property?
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A: As long as you are operating the LLC as a distinct and separate entity, liability is limited to the assets of that LLC. To go after you personally or your assets, someone would have to show that you are not operating the LLC as a separate entity, that you are commingling funds and ignoring the organizational requirements. This is sometimes referred to as “piercing the corporate veil”.
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