If you own rental property here in Louisiana or you have friends with rental properties, you have probably heard that LLCs are a good way to protect you from lawsuits, but the question is why and how? I was talking with a former client from Metairie yesterday, and after setting up multiple LLCs for his multiple rental properties, he told me how few of his colleagues understand how Louisiana LLCs work to protect rental properties.
The client told me that he sees so many people setting up just one LLC and lumping all of their rentals into a single LLC thinking this will give them the lawsuit protection they seek. However, this strategy is misguided. When you own multiple rentals, the key is to spread your lawsuit exposure across as many LLCs as possible–ideally 1 LLC for every Louisiana Rental Property.
When all your properties are in a single LLC and someone gets hurt on one of the properties and sues your LLC, your liability can extend to all other properties in the LLC and you could lose all of the properties. When you have an LLC for each property and a lawsuit arises on one property, the liability or exposure is limited only to the value of that one property and does not extend into your other LLCs for your other properties. The key is to operate each rental as a separate business.
If you own Rental Properties here in Louisiana and you want to give yourself the best protection possible, call (504) 274-1980 in the Metairie and New Orleans Area or call (985) 246-3020 in Mandeville, Covington, Slidell, Houma, Thibodaux, and surrounding areas.