Xfering houses to corp / Holding Corps

Xfering houses to corp / Holding Corps

johnmolinda@yahoo.com	7/20/2005 1:15:50 PM
Several real estate investors I know were talking the other day and they said each investment house they own, which contains a renter, is owned by an S-corp in which each landlord owns 100% of the common stock. The deed shows the owner as the S-corp, the insurance is in the name of the S-corp, the rental agreement is between renter and S-corp, and the rent checks are made out to the S-corp. Does this really limit the liability of the landlord? For example, could the landlord be personally sued as 100% owner of the S-corp that owns the house or is the S-corp, which has no assets, be the only liable legal entity? If it does help I will quitclaim my houses to an S-corp. Also, can anyone explain why some companies use "holding companies". For example, United Airlines, Inc. is 100% owned by UAL, Inc - a publically traded company. I was thinking of forming a holding company for several of my S-corps but I'm worried of one corp under the holding company gets sued, all others and the holding company itself can get sued.



Paul Cassel	7/22/2005 1:21:52 PM
johnmolinda@yahoo.com wrote: Several real estate investors I know were talking the other day and they said each investment house they own, which contains a renter, is owned by an S-corp in which each landlord owns 100% of the common stock. The deed shows the owner as the S-corp, the insurance is in the name of the S-corp, the rental agreement is between renter and S-corp, and the rent checks are made out to the S-corp. Does this really limit the liability of the landlord? Yes barring certain State statutes which may limit the extent of the corporate shield. I'm not saying they are there, but they may be. In any case, the existence of the corporation does shield the holders of the corporation from most liablities. For example, could the landlord be personally sued as 100% owner of the S-corp that owns the house or is the S-corp, which has no assets, be the only liable legal entity? If it does help I will quitclaim my houses to an S-corp. Under most circumstances where those dealing with the S corp are private parties or other corporations, the shield can't be pierced. Before doing anything, consult with an expert as to the best business structure. Many today prefer LLC's to S corps.



"Carl S."	7/24/2005 1:41:28 PM
"Paul Cassel" <pcasselplus2@comcast.net> wrote in message news:sna2e1d4qh80jq0s2k337bo2cmo6o6ri44@4ax.com... For example, could the landlord be personally sued as 100% owner of the S-corp that owns the house or is the S-corp, which has no assets, be the only liable legal entity? If it does help I will quitclaim my houses to an S-corp. Under most circumstances where those dealing with the S corp are private parties or other corporations, the shield can't be pierced. Before doing anything, consult with an expert as to the best business structure. Many today prefer LLC's to S corps. Just a few of quick folllow up issues. First, transferring the property to a corporation may trigger a capital gains tax. In terms piercing the corporate to hold individual shareholders liable for corporate debts, there are two different categories of creditors to consider: "voluntary" creditors and "involuntary" creditors. It is easier for "involuntary" to pierce the coprorate veil. By voluntary creditors, I mean people who knowingly do business with as a corporation such as a lender. The voluntary creditor can protect itself by demanding personal guarantees. It is nearly impossible for a voluntary creditor to pierce the corporate veil absent very serious fraud and abuse of the corporate privilege. By involuntary creditors, I am generally referring to tort victims such as a slip and fall victim. If the corporation cannot pay compensation to the accident, the court may exercise discretion to pierce the veil and compensate the victim. The best way to protect shareholders from involuntary creditors is to have adequate insurance. Finally, individuals would not be protect if they were actively involved in a tort or if they signed a personal guarantee.

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