Important Info for Landlords Running a LLC and Evicting Tenants

Property Management Blog

There are many ways of running a business for a landlord.  One of the most common of these methods is to create an LLC (A limited liability company). By using this method, a landlord can earn more profits as his main business gets separated from his other property. Also, there is much reduced risk to the personal property of a landlord in case he is sued by a tenant. You have no risk to your home, car, stocks, and bonds if you are operating an LLC as a landlord.  It also helps you in carrying out estate planning in a much better manner.

If you do not know how you can secure your personal property and other assets through an LLC, you should know that it is a totally separate entity. This means your business has nothing to do with your personal assets and you are not responsible or liable for any loss that takes place in your business. Loans you take for your business as a landlord are separate and so are your bank accounts. In fact, you use separate credit cards for your business and your personal life. You will be surprised to know that your LLC has a different address than your personal address. All this means that it is your LLC and not you who control your landlord business.  Of course, you are boss and run the LLC, but your tenants can only sue the LLC and not you when they try to claim any kind of compensation.

If any accident takes place in your rental property and your tenant sues you for compensation, he can only name your LLC in the lawsuit and not you. This is how your LLC provides a shield to keep you protected all the time.

Let us now come to the topic of eviction. No matter how robust screening process you may be using, it is common to find one or two bad tenants sneak past and create trouble for your business. You have to utilize tenant eviction to deal with these tenants at one point of time or the other. If you are running a LLC, it is not you but your lawyer who gets to represent you in a court of law in the case of an eviction.  It is not because you cannot state the facts in a competent manner in front of the judge.  It is also not because eviction cases are very complex for you to understand.  It is because your LLC is deemed as a separate entity, a unique entity different from you in the eyes of the court.  If you stand in the court to defend this entity, you need a license like an attorney. This is the reason why you need the help of a lawyer to fight your eviction case against your tenant if you run an LLC as a landlord.

No judge will allow you to practice law without holding a license in your name.  If they find out that you are not a lawyer and still standing to defend your LLC, they will prohibit you from doing so. At the best they can consider it as a mistake on your part. But if you are thinking you can save your money in this way, you are mistaken. You will lose not just your time but also money if you commit this mistake.

Thus, you can see that while running your business as an LLC is profitable by providing you with a protective shield, it also adds some costs for your business.  You must pay the fee of a lawyer if you are using eviction against one of your tenants.

If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty. 

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