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Author Topic: LLC or TRUSTS  (Read 9954 times)

Offline unit

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Re:LLC or TRUSTS
« Reply #15 on: October 03, 2006, 08:34:58 am »
mcwagner,

so i don't need a separtate account to put the tenants money in? i can have one account open and put all their money into it? I just have to keep record of all debts and credits?

also i was wondering if you knew of any private or hard money lenders. I have come across some properties that i would like to Flip but don't have the funds. I have just about everything else in place as far as a team of people that i am working with except for the financing. do you know of anyone or company?

Offline mcwagner

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Re:LLC or TRUSTS
« Reply #16 on: October 03, 2006, 08:50:32 am »
correct.  unless you physically need to seperate the money to keep from spending it, it's just a bookkeeping entry.
Mark Wagner, CPA, LLC
Certified Public Accountant
http://www.facebook.com/MarkCWagnerCPA

Offline kdhastedt

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Re:LLC or TRUSTS
« Reply #17 on: October 03, 2006, 08:56:04 am »

Mark,

In Louisiana, I was not allowed to co-mingle security deposits with rents/operating funds.  I kept the operating funds in a checking account and the deposits in the savings account.

Keith
I have CDO...it's like OCD but in alphabetical order - the way it should be!

Offline mcwagner

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Re:LLC or TRUSTS
« Reply #18 on: October 03, 2006, 09:11:59 am »
curious.  not allowed by who?
Mark Wagner, CPA, LLC
Certified Public Accountant
http://www.facebook.com/MarkCWagnerCPA

Offline kdhastedt

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Re:LLC or TRUSTS
« Reply #19 on: October 03, 2006, 09:46:59 am »

The State of Louisiana...this according to my Realtor (20+ years, property mananger, and owned income properties) and the real estate attorney that I used.  It seemed easy enough and was no hassle, so I never actually researched the state law regarding...but Louisiana Law is absolutely bizzare -- it's based on French Napoleanic laws.  It is archaic and very different from anything I've ever seen.

Keith
I have CDO...it's like OCD but in alphabetical order - the way it should be!

Offline mcwagner

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Re:LLC or TRUSTS
« Reply #20 on: October 03, 2006, 02:19:13 pm »
3251.  Lessee's deposit to secure lease; retention by lessor; conveyance of leased premises; itemized statement by lessor

A.  Any advance or deposit of money furnished by a tenant or lessee to a landlord or lessor to secure the performance of any part of a written or oral lease or rental agreement shall be returned to the tenant or lessee of residential or dwelling premises within one month after the lease shall terminate, except that the landlord or lessor may retain all or any portion of the advance or deposit which is reasonably necessary to remedy a default of the tenant or to remedy unreasonable wear to the premises.  If any portion of an advance or deposit is retained by a landlord or lessor, he shall forward to the tenant or lessee, within one month after the date the tenancy terminates, an itemized statement accounting for the proceeds which are retained and giving the reasons therefor.  The tenant shall furnish the lessor a forwarding address at the termination of the lease, to which such statements may be sent.  

B.  In the event of a transfer of the lessor's interest in the leased premises during the term of a lease, the transferor shall also transfer to his successor in interest the sum deposited as security for performance of the lease and the transferor shall then be relieved of further liability with respect to the security deposit.  The transferee shall be responsible for the return of the lessee's deposit at the termination of the lease, as set forth in Subsection A of this Section.  

C.  Paragraph A of this Section shall not apply when the tenant abandons the premises, either without giving notice as required or prior to the termination of the lease.  

Added by Acts 1972, No. 696, 1.  Amended by Acts 1974, No. 697, 1; Acts 1981, No. 499 1; Acts 1985, No. 578, 1.  

I don't find anything about "segregating" security deposits in LA.
Mark Wagner, CPA, LLC
Certified Public Accountant
http://www.facebook.com/MarkCWagnerCPA

Offline Cate

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LLC or TRUSTS/Security Deposits
« Reply #21 on: October 03, 2006, 09:52:32 pm »
Hi All,

Here in the State of Washington, where I operate my own property management and maintenance company for which a real estate broker's license is required, we also are required to maintain a separate security deposit 'trust' account for the 'tenants' funds.  These are not the owner's funds . . . they belong to the tenants.

As a management company, we are audited about every two years by the Department of Licensing . . . they walk in and want to see books now . . . no scheduled appointments.  That is one of the first things they check . . . how are the security deposits handled.

However, owners are not audited as we, licensed real estate brokers/agents, are.  So they fly under the radar more often than not.  The only time they may get a 'visit' is if a tenant files a complaint.

Even without the overly burdensome governmental regulations, it is just a good idea to keep that money separate and never consider it to be yours until the move out inspection is done and you know if they're giving it up.

Good discussion and information on the LLC's v. Trust.  There are also many tax advantages to trusts depending on which type you select.

Good luck.

Cate

"Life's a banquet and most poor suckers are starving to death."  Auntie Mame

Offline mcwagner

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Re:LLC or TRUSTS
« Reply #22 on: October 04, 2006, 06:51:49 am »
good to know.  lots of weird little laws out there.

also interesting to note:  

I found that some states limit how much security deposit you can charge.  (limited to 30 day's rent, etc).

Texas has no such limit, BTW.
Mark Wagner, CPA, LLC
Certified Public Accountant
http://www.facebook.com/MarkCWagnerCPA

Offline SpaceAce

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Re:LLC or TRUSTS
« Reply #23 on: October 04, 2006, 07:20:18 am »
It's unfortunate that the gov't can regulate how much some one puts down as a deposit. I have a tenant with "less than perfect credit". She gladly put down a very sizeable security deposit in order to get the rental. I don't see a problem with it.

Offline Cate

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Security Deposits
« Reply #24 on: October 04, 2006, 08:31:02 pm »
Hi SpaceAce,

In WA, we are not regulated as to how much we can charge for a deposit . . . only with regard to the way it is held and accounted for from beginning to end.  Our company charges anywhere from a minimum of $300 to $2000 on a high end house.  

What state are you in?

Cate
"Life's a banquet and most poor suckers are starving to death."  Auntie Mame

Offline SpaceAce

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Re:LLC or TRUSTS
« Reply #25 on: October 05, 2006, 09:41:10 am »
Where I am we have no law regarding deposits. As far as I know.
We have rules regarding comingling though.

Offline NYCATLHOLDINGS

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Re:LLC or TRUSTS
« Reply #26 on: February 09, 2007, 02:21:46 pm »
you can:

1)  put the property in trust with LLC as beneficiary.  pros:  doesn't violate DOSC.  cons: costly and hassle.
2) transfer the property to the LLC with general warranty deed (not quitclaim).  pros: easy, quick. cons: technically violates DOSC. however I have never heard of a bank calling due a performing loan.

Quick question. I formed an LLC last year in March. My intention is to refinance my principal residence - transfer ownership to the LLC/Trust - and then rent the property.

- Wy would you use a general warranty deed and not a quitclaim?

- Once I refi my property and transfer title to the LLC - the property is still on my credit - right?

- If so, and I want to by another home to occupy personally, will the bank allow it - seeing as I have 1 mortgage on my credit?

Thanks!  :smile

 




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