Should I Close Out My Apartments LLC?

by Joe
(Michigan, USA)

I could use some opinions please, I know I need to discuss this with my Attorney but I would like a few plans to approach him with...

Hello There,

Is my LLC helping me or hindering me?

So far it has only cost me money! I'm feeling there is no legal protection nor financial advantage.

Let me explain...

I followed the advice 6 years ago to hire a real estate attorney.

I have 3 rental houses, 2 on one property, and 1 on an adjoining lot. That's 3 houses on 2 separate deeded lots next to each other.
I'm currently living in the 1 house that has 2 houses on that lot.

My attorney was more than willing to set up my LLC and he charged me $850.00. I realize I could have used on on-line service to set up my LLC for under $200.00, but I was hoping for guidance.

After the LLC was set up I asked my attorney if my properties were protected from my personal holdings.

He said, "No". I'm still personally liable because I own the LLC business. In other words, if the LLC company doesn't have the funds to defend itself, a lawsuit would then go after the owner.

Don't forget to record your "Minutes".
What are minutes?
My attorney explained that in about 30 seconds and I never did get the scope of that.
I bought some books, studied about the minutes and responsibilities of a LLC owner, but what's the use if the LLC doesn't shield my personally?

Second Issue: Financing

The Bank has no problem putting my LLC name on the loan as long as I personally guarantee the loan.

I pay more interest (7%)because it is a business loan.

"The business loan will always have a 5 year balloon", my banker said. I'm due to refinance this year with 15 years to go.

To refinance; the bank is requiring new appraisals and financing fees.

My insurance agent says, "It's not the LLC that protects me, it's my liability insurance policy that does."

My CPA charges extra for the LLC tax forms and wasn't clear in his explanation to me whether I'm benefiting more from having an LLC versus the Sole-Proprietor status.

I will not buy any more rentals.

Of the 3 I have, I live in one, and the other 2 are geared for retirement income.

I'm gearing up to refinance this year, it would fantastic to get the current lower interest rate for principle residence.

I'm feeling the LLC is more costly and more cumbersome than the benefits it supposedly provides.

Any suggestions would be greatly appreciated.
Thank you very much.

Joe from Michigan

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LLC Pros and Cons
by: Mo Johnson

Hi Joe, well like most legal answers, the correct answer is "it depends."

The truth is that incorporating a business as a corporation or LLC does shield you somewhat from personal liability -- although not entirely. It is always possible to "pierce the corporate veil" in legalese -- depending on the circumstances and local law.

But, I don't think anyone would say an LLC provides no liability benefits -- after all the very name is "Limited Liability Company." There's no doubt that it certainly makes it more difficult for someone to sue you personally for something that the LLC did -- they would have to show that under the law of the state you live in, you should be held personally liable. Reasons that you would be personally liable vary from state to state.

You can read more about this at

Benefits of Incorporation and

Which Business Entity is Best?

Having said all that -- of course I can't provide you individual legal advice since I don't know your particular circumstances or the law in your state. This is just general information and you should rely on the advice of your attorney.

But, feel free to discuss this with him.

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