Rights as a LLC
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Rights as a LLC
What are my rights as I sold a house by forming a LLC and the buyer is suing us after 2 years. Can we be liable for any reason?
Regards,
Anita
anitashiryahoo.com
Asked on March 24, 2017 under Real Estate Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
Certainly, IF the buyer has a good or valid cause of action (such as for fraud or breach of contract) he can sue the LLC so long as the action is being brought within the "statute of limitations" (time within which you must file a lawsuit) for that type of claim. As you whether you personally can be liable, you could be if--
a) you have deliberately hidden or transferred assets from the LLC for the purpose of thwarting creditors;
b) you comingled personal assets and LLC assets and so effectively erased the distinction between yourself and the LLC);
(Note that a) and b) can be difficult for the other side to show or prove, so they don't often happen.)
c) You either personally guaranteed some obligation or signed the contract of sale in a personal capacity, not as an LLC member;
d) The transfer of the property to the LLC was legally deficient in some way, so that you still owned it personally when you sold it; or
e) You personally committed a wrongful act, like intentionally lying about some important fact or condition (i.e. committed fraud), in which case you can be held liable for your own personal wrongdoing.
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