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What Is Asset Protection in Real Estate

If you’ve invested your hard-earned money in real estate, the last thing you want is for a legal claim to wipe out your investment and undo your hard work. Asset protection in real estate is a way to insulate your investment and personal finances from outside claims. For example, you can put the real estate in a limited liability company’s (LLC) name rather than in your or your spouse’s name. If someone sues you and wins, the real estate investment is likely outside the court’s reach because it’s not in your name. 

This post explains what real estate asset protection is and strategies you can use to protect your investments. 

Mallery s.c. has significant experience helping real estate investors plan for and protect their investments appropriately. We pride ourselves on our diligence and unwavering commitment to our clients.

The Basics of Asset Protection for Real Estate

Real estate asset protection is a strategy to protect the property, its value, and the investor’s assets. It’s a way for you to help ensure a lawsuit or legal claim doesn’t wipe out your investment or your personal bank account.

For example, let’s say that faulty wiring causes a fire in a commercial building you own. The fire department arrived as soon as possible, but the property suffered significant fire damage. It will cost thousands of dollars to repair the damage, and, in the meantime, the building is unusable by the tenants. Without proper insurance, you will be responsible for paying enormous expenses out-of-pocket. 

Appropriate asset protection differs from situation to situation. Further, if an agreement isn’t worded correctly or the wrong insurance policy is taken out, it can spell disaster for your investment. Therefore, it’s essential to talk to licensed professionals about your assets and how to protect them from creditors or plaintiffs. There is no such thing as a one-size-fits-all solution when we’re talking about real estate asset protection. 

Mallery s.c. regularly provides effective and efficient legal counsel to real estate investors. We take the time to understand your priorities and the nature of your investment. Then, we craft a strategy that helps protect your investment and personal assets. 

Real Estate Asset Protection Strategies You Can Use

So, what are some real estate asset protection strategies that you can consider? Let’s go over those now. 

Take Out the Right Amount and Type of Insurance

As we discussed, having the right insurance policy at the right time can make a huge difference. You never know when someone will trip and fall on your property or if a fire will break out. These legal claims and their fallout can make or break your personal bank account or irreparably destroy the property.

When investing in real estate, taking out the right type and amount of insurance is critical. 

Don’t Put the Property In Your Personal Name

A vital part of any asset protection plan is separating your property investments from your personal assets. Doing so helps limit a potential plaintiff’s access to your assets should something happen. Additionally, it makes it harder for them to discover that you own the property. 

One way to protect your assets is to not hold the property in your or your spouse’s name. Instead, you can take steps such as:

  • Forming an LLC and putting the property in the LLC’s name; or
  • Establishing a land trust.

Doing this can add a layer of protection between the property and your assets. If someone does sue the LLC, their ability to recover compensation is generally limited to the LLC’s assets. In other words, in most situations, they can’t also go after your assets because of an injury they acquired on the property. 

Hire Trusted Property Managers

Another way to help protect your assets is to hire a trusted team of property managers. They can help ensure that the proper signage is in place to limit liability for a slip and fall. Or they can oversee property maintenance and training. Having boots on the ground helps limit the potential for legal claims due to negligence. 

Consult a Legal Professional

Anytime you’re trying to limit legal liability, you’re in the wheelhouse of an attorney. Because of that, it’s essential to talk to legal professionals early on. The parties often could have avoided or limited legal issues by consulting an attorney before things escalated. 

Set yourself up for success by hiring an attorney, not waiting until you get served with legal paperwork. 

Mallery s.c.—Real Estate Asset Protection Attorneys You Can Trust

Investing in real estate is an exciting and often lucrative venture. But simple missteps can cost you thousands down the road, jeopardizing your personal finances and your investment. 

Our team can help you devise a real estate asset protection plan that suits you and your budget. A formidable player on our team, Adam Bardosy has over 15 years of experience in real estate and asset protection. His compassionate and creative approach to the practice of law is indispensable. 

Don’t go it alone or go without an asset protection plan. Protect your investment by calling us today or contacting us online

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