How to Protect Your Rental Property from Lawsuits

Today we’re talking about asset protection. If you’re wondering what that is, it can be a number of different things, such as an insurance policy or a separate entity that protects owners from lawsuits and claims. They can also protect an owner’s personal assets and real estate when structured correctly.

Before we tell you much more, it’s important that you understand we are not attorneys. This is not professional advice on asset protection. We always recommend you talk to an attorney on this particular topic. Asset protection should not be taken lightly. These strategies that we’re sharing with you have been successful for us and for our property owners over the years.

Establishing an Entity

One of the most common ways to protect your assets is through the establishment of a Limited Liability Corporation, or an LLC. For example, if you own three separate companies you can put them all under the protection of your LLC. That will cover you to a certain extent, but some people would recommend that you set up a separate LLC for each company. That will cost you more money and involve a little more work, but it will also give you much better legal coverage.

There’s also the option of establishing an S-Corporation or a C-Corporation to help protect your assets from lawsuits and liabilities. You’ll need the help of an attorney to get one of these entities in place.

Insurance Protection

Another option is talking to your insurance agent. Ask about using an umbrella policy to cover your real estate assets. If you have three or five properties, for example, you’ll want additional coverage under that umbrella policy. Insurance won’t always be as complete as an LLC, but it will help you protect yourself and your finances.

Asset ProtectionDo your due diligence. Every investor has different needs, different concerns and different levels of liability and required protections. In California, the Landlord Tenant laws cover the tenants thoroughly. If you aren’t protected, you might find yourself in a lawsuit with the potential of being financially wiped out. This isn’t intended to scare you, but we do want you to be educated and protected.

We are a full service property management company, so if you have any questions or you need a referral to an experienced attorney, please contact us at Golden Gate Real Estate and Management, and we’d be happy to help you.

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