{"id":369,"date":"2010-07-09T19:54:45","date_gmt":"2010-07-09T19:54:45","guid":{"rendered":"http:\/\/blog.topbev.com\/?p=369"},"modified":"2010-07-09T19:54:45","modified_gmt":"2010-07-09T19:54:45","slug":"massachusetts-real-estate-investors-the-llc-beats-all-the-others-for-ease-of-operations-and-protection","status":"publish","type":"post","link":"https:\/\/blog.topbev.com\/?p=369","title":{"rendered":"Massachusetts Real Estate Investors–The LLC beats All the Others for Ease of Operations and Protection"},"content":{"rendered":"

As a practicing real estate attorney<\/strong> with more than 40 years of experience in Massachusetts real estate <\/strong>transactions, I have pretty much seen all permutations and combinations of investment entities<\/strong>. When I first started practicing, limited partnerships<\/strong> were in vogue. That entity became further refined when people started creating corporations <\/strong>to be general partners<\/strong>. Limited Partnerships, frankly, had limitations. There was difficulty allocating cash flow among the participants; there were worries that any participation by a limited partner might make that person subject to entity liability. Limited Partnerships are still in use in special situations. These generally involve large, large transactions in commercial contexts.<\/p>\n

Through the years, many people have embraced the use of Nominee, or Dummy, Trusts<\/strong>. These entities have the basic advantage of anonymity, and not much else. Recently, most tax accountants are taking the position that the Nominee Trust must file an informational tax return and thereunder “pass-through” the income and depreciation to the underlying beneficiaries. At one point, this second expensive step was not required. The worst part about the Nominee Trust, from my point of view, is that there is no real certainty that the underlying beneficiaries would be insulated from liability for obligations of the Nominee Trust. I now use Nominee Trusts in only situations where the property is residential and liability and umbrella insurance coverage<\/strong> would appear adequate for normal risks.<\/p>\n

This brings us to my “Entity of Choice”, the Limited Liability Company<\/strong> (the “LLC<\/strong>“). Until relatively recently, Massachusetts, in its typical fashion, refused to join the other 49 states in permitting Single Member<\/strong>LLC’s. Fortunately, those days are over, and the Single Member<\/strong> LLC is permitted. For your information, before the change, we needed to enlist a family member or close friend to become a minuscule Member to comply with the statute.<\/p>\n

Now that Single Member LLC’s are permitted, there is no reason to use any other entity (other than an owner being “penny-wise and pound foolish” regarding the cost. In Massachusetts, there is a $500 filing fee<\/strong> for the LLC. There is an additional $500 Annual Fee<\/strong> after filing. Be advised, that there is a way to have “serial” LLC’s<\/strong> to avoid some of these fees, but that will be the subject of a future post.<\/p>\n

So, for rather short money, a person who owns investment real estate in Massachusetts<\/strong> can operate like a sole proprietorship<\/strong> (some caveats here, see below) and have all the insulation aspects of a corporation. Moreover, if desired, an LLC Operating Agreement<\/strong> can be precisely tailored to admit “partner” Members and give them unique benefits. The Massachusetts LLC has one, or more, Managers<\/strong> (really a combination chief executive officer and sole board of directors member) and any number of Members<\/strong> (think of shareholders). The Certificate of Organization<\/strong> for the LLC generally provides the Manager with plenipotentiary powers, including the power to deal with real estate. The only thing the Manager has to remember at all times is to sign all leases and other contracts as “John Doe, Manager of the LLC”<\/p>\n

At Topkins & Bevan<\/strong>s, the law firm<\/strong>of which I am the founding partner, we work with Massachusetts LLC’s virtually every day. Call, or email,\u00a0 me with any\u00a0 Massachusetts LLC<\/strong>questions or concerns, and we will gladly address them for you. No charge for any of this until, we both agree there will be. Just part of being a good ActiveRain citizen.<\/p>\n","protected":false},"excerpt":{"rendered":"

As a practicing real estate attorney with more than 40 years of experience in Massachusetts real estate transactions, I have pretty much seen all permutations and combinations of investment entities. When I first started practicing, limited partnerships were in vogue. That entity became further refined when people started creating corporations to be general partners. Limited … Continue reading Massachusetts Real Estate Investors–The LLC beats All the Others for Ease of Operations and Protection<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[1],"tags":[237,238,239],"class_list":["post-369","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-investment-entities","tag-massachusetts-limited-liability-companies","tag-single-member-limited-liability-companies"],"jetpack_featured_media_url":"","jetpack-related-posts":[{"id":410,"url":"https:\/\/blog.topbev.com\/?p=410","url_meta":{"origin":369,"position":0},"title":"Protection of Your Investment, Easy Allocation of Contributions of Partners–It is extremely hard to beat the “Limited Liability Company”","date":"July 12, 2010","format":false,"excerpt":"Anyone who owns a business venture should be concerned with certain basic truths.\u00a0 It is a sad but true fact that our society is becoming more and more litigious every day, and more and more small business owners are finding themselves on the wrong side of law suits.\u00a0 Right or\u2026","rel":"","context":"In \"limited liability companies\"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":138,"url":"https:\/\/blog.topbev.com\/?p=138","url_meta":{"origin":369,"position":1},"title":"Massachusetts Real Estate Transactions-A world of their own","date":"June 23, 2010","format":false,"excerpt":"I am frequently asked by out of state realtors and mortgage professionals about deals \"going into escrow\" or the work of the \"title company.\" Very few out of Massachusetts people are aware of the idiosyncrasies of Massachusetts real estate practice, which include the following: \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1. An Offer and then\u2026","rel":"","context":"Similar post","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":268,"url":"https:\/\/blog.topbev.com\/?p=268","url_meta":{"origin":369,"position":2},"title":"Twitter Power for Active Rain–I Tweeted the Whine and AR treated me fine","date":"July 2, 2010","format":false,"excerpt":"I do not know his name.\u00a0I always get people's names, and write them down, \u00a0when they call me. I have been practicing real estate law in Massachusetts\u00a0 for more than forty years. I know better. Suffice it to say, whomever he was, he was very helpful. He responded right after\u2026","rel":"","context":"In \"activerain as responsive\"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":329,"url":"https:\/\/blog.topbev.com\/?p=329","url_meta":{"origin":369,"position":3},"title":"Representing an Out of State Client in a Massachusetts Real Estate Transaction–The “Massachusetts Rules” Can be Difficult to Comprehend","date":"July 7, 2010","format":false,"excerpt":"When I attended a national law school almost 45 years ago, we would learn two sets of rules in almost every discipline--the law for 49 states and then the \"Massachusetts rules\". Today, after practicing law in Massachusetts as a real estate lawyer, I must admit to each of you that\u2026","rel":"","context":"In "closing"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":173,"url":"https:\/\/blog.topbev.com\/?p=173","url_meta":{"origin":369,"position":4},"title":"Massachusetts Tenancy by the Entirety and Declaration of Homestead–A Basic Primer","date":"June 24, 2010","format":false,"excerpt":"In Massachusetts, and possibly in other states as well, significant protection is given to the non-debtor spouse if the married\u00a0couple elects to take title as \"husband and wife, tenants by the entirety\". There are other advantages to tenancy by the entirety, such as avoiding probate, but the principal advantage is\u2026","rel":"","context":"In \"declaration of homestead\"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":280,"url":"https:\/\/blog.topbev.com\/?p=280","url_meta":{"origin":369,"position":5},"title":"Refinancing Your Present Mortgage–Make sure that the Lenders, and Closing Agents, are Financially Able to Perform","date":"July 2, 2010","format":false,"excerpt":"In today's edition of the Boston HERALD, there is an article about a Borrower in Illinois, who recently refinanced his mortgage with a mortgage lender. The check which the refinancing Mortgage Lender sent to the person's then mortgage lender \"bounced\", and the former mortgage lender is now foreclosing on the\u2026","rel":"","context":"In "Mortgages"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/posts\/369","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=369"}],"version-history":[{"count":4,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/posts\/369\/revisions"}],"predecessor-version":[{"id":822,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/posts\/369\/revisions\/822"}],"wp:attachment":[{"href":"https:\/\/blog.topbev.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=369"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=369"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=369"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}