Congratulations, you just bought a real estate investment property! As you set up your first renter you think of the time and hard work you put into the property, and now it is finally going to pay off. The monthly rent on this place is sure to pay for itself right? Flash forward a few months…things are going great until… the tenant slips inside the house due to “slippery floors.”
The renter then decides to sue you. WHAT?!?! That wasn’t part of the plan!
In your mind it was the fault of the tenant who had just waxed the floor and was walking around in fresh clean socks, but in their mind it was your fault for negligence. The tenant decides to sue you for medical costs, lost wages from not being able to work, and any punitive damages they can get. Whether the law suit is justified or not, they are still suing you which means more time and money.
Now, in this hypothetical scenario if for some reason the tenant were to win this law suit, the amount they could actually take from depends on a few factors, a major one being if you have protected yourself properly in an LLC. If the property they are suing you over is protected property, then they can only sue you for the assets in your property, if it isn’t properly protected, then they can sue you personally and apply the lawsuit to all of your personal assets, which is much much worse.
We sincerely hope this scenario never happens to you, but peace of mind is invaluable. Veil Corporate is not a scam, it’s common sense.