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  1. #1

    Default Benefits and Costs of Forming LLC for Condo Rental

    My question involves a condominium located in the State of: Florida

    I live in Colorado, and own a condo in Florida. I rent the Florida condo out, and will probably continue to do so for several years until eventually I move there and occupy the condo full time.

    I have an imperfect/ incomplete understanding of LLC's. I've gathered that forming an LLC for this condo would provide a barrier for me if, for example, a tenant slips and falls, then sues. Having the condo as an LLC would limit my potential loss to the condo it's self, and not anything else I own.

    Is the description above fundamentally correct? What are other benefits/ costs of forming an LLC for this purpose?

    thanks!

  2. #2
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Benefits and Costs of Forming LLC for Condo Rental

    whether you could be held liable or not can vary, a lot, depending on how you treat the LLC. You should research "piercing the corporate veil". Especially in a single person LLC, it becomes much more likely a creditor could argue the LLC was not treated as a separate legal entity but was merely a sham to make an attempt to hide you from liabilities. Is such a situation, a court can rule you liable for LLC liabilities.

    You also need to realize the LLC will become the owner of the condo. If you have a mortgage loan on the property, that could be a problem.

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