If you own rental property, form a Limited Liability Company (also known as an LLC) and place the rental property in the LLC.
The LLC’s creditors can only access the bank account and other assets owned by the LLC. The personal assets of each LLC member are not subject to being seized by creditors because owners’ assets are separate from the assets of the LLC.
Therefore, an owner of an LLC only risks the money he or she has invested in the business.
Some investors hold their rental property in a land trust for privacy of ownership. Then hold the land trust in an LLC for lawsuit and asset protection.
More than one rental property? Own each piece of real estate in a separate LLC. Thus, a lawsuit against one of your rental properties does not domino into losing all of them.