How would one protect their vacation homes, rental properties or other commercial properties?
The strategies we would use to protect your vacation home and investment real estate would follow different strategies than what we would use to lawsuit-proof your home. We use different strategies for the home because we want to preserve the home's tax benefits. That's why we would title the residence to your personal name or a single-member LLC. You also want to preserve your homestead protection. However, homestead protection and the homeowner's tax benefits don't extend to other real property. So we have different protective options for non-primary residence real estate. Investment properties, of course, can also impose more potential liabilities than your residence, so you also want to personally protect yourself against the potential liabilities that arise from owning rental properties. Landlords have many potential liabilities. They get sued by tenants, tenants' guests, sub-lessees, neighbors, neighborhood associations, contractors and even trespassers. They are also sued for all sorts of property defects. And a landlord can be held 'strictly liable' whether or not the landlord acted negligently.
Protecting investment real estate is now a more important aspect of our practice because so many more individuals and families now own rental properties. It's often a significant portion of their net worth. This was less true in past generations when relatively few people owned income properties and second homes. 'Landlording' was then not so popular a business. But the surge in second residences, vacation homes, land speculation, property 'flipping,' development and other real estate pursuits brings to the forefront the need to protect – and be protected – from these properties. Fortunately, we have a number of good ways to accomplish this. Our present challenge is chiefly to protect the client's other wealth from their distressed property and the deficiencies on bank notes. These are interesting financial times – particularly for real estate investors.