Holding Title to Investment/Rental Properties – Liability

Holding Title to Investment/Rental Properties – Liability

Holding Title to Investment/Rental Properties – Liability Whether it is a single-family home or a condominium, real estate investors often buy investment properties in their personal name.  In order to avoid personal liability, it has become increasingly popular to own investment properties in a business entity such as an LLC.  LLCs can limit or protect an investor’s personal assets from lawsuits related to the property. As there are many condominiums in South Florida, imagine the current scenario:  a tenant renting a condominium accidentally drops a bottle of wine from a balcony that strikes someone below.  It is likely that the injured person, or their estate, will file a lawsuit against the owner of the condominium.  If the rental property is owned by the real estate investor individually, he or she will be named in the lawsuit personally and will have to defend his or her personal assets from the claims.  On the other hand, if the rental property is owned by an LLC, the owner’s exposure would be insulated by the protection of the company, leaving only the assets owned by the LLC exposed to the lawsuit. Can a Buyer be Required to Use a Particular Title Insurance Company Recently a client approached me after signing a real estate contract to inquire as to the enforceability of a clause in the purchase agreement that required the buyer, who was paying for the title insurance policy, to use a particular agent.  The Real Estate Settlement Procedures Act (“RESPA”) was passed in 1974 to protect buyers and sellers of real estate.  Section 9 of RESPA prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. In fact, in the event a seller violates this provision, the buyer may sue a seller for an amount equal to three times all charges made for the title insurance.  The exception is when the seller agrees to pay for the title insurance. For help or assistance in relation to litigation and real estate matters, please contact us at: Hiller Law, P.A. Douglas C. Hiller, Esq. 3132 Ponce de Leon Blvd. Coral Gables, FL 33134 www.dhillerlaw.com Contact Information: Phone: (305) 456-4607 Fax: (786) 441-4337 Email: info@dhillerlaw.com