If I rent my house, should I setup an LLC business?

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If I rent my house, should I setup an LLC business?

If I rent my house out, am I more protected if I setup an LLC to rent the property and accept rent versus just doing this as the owner?

Asked on October 21, 2016 under Business Law, Connecticut

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

You are more protected--significantly more protected--by using an LLC rather than doing this in your own name. If an LLC is the property manager and landlord, a disgrunted tenant (e.g. one who claims you lied about the home, committing fraud, or that it had habitability problems, or that he was denied "quiet enjoyment") can only sue the LLC, not you personally.
You will slightly increase your costs: an LLC can only be represented in court by an attorney--the owner, even a sole owner, cannot represent an LLC in court. Therefore, if you need to go to court for any reason (to evict; suing for unpaid rent; etc.), you will have to hire a lawyer and cannot represent yourself as landlord. That said, as an experienced landlord-tenant attorney (though in NJ, not CT), I think it's *always* a good idea for a landlord to have an attorney: landlord-tenant law can be surprisingly technical and small mistakes can invalidate your case, but at the same time, most cases are short, making having a lawyer both a good idea and affordable.


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