Overview of Series LLC
A series LLC allows real estate investors to segregate properties for liability protection without forming separate entities for each property. However, proper formation, documentation, and maintenance are critical to gain these benefits in practice. The series LLC provides a flexible structure to manage risk across a property portfolio.
States Allowing Series LLC Formation
Only certain states allow series LLC formation: Delaware, Illinois, Iowa, Nevada, Oklahoma, Tennessee, Texas, Utah, and Puerto Rico.
Operating a Series LLC
- Each series operates like a separate entity with a unique name, bank account, and books.
- Rights and obligations of members and managers differ by series.
- Each series can enter contracts, sue/be sued, and hold property title.
- Most important is the liability protection available to each series.
Considerations for Series LLC Usage
- Check state laws to ensure recognition of series LLCs in each state of operation.
- Maintain separate and accurate accounts for each individual LLC.
- Series LLC is best for single-family investments rather than commercial or multifamily investments.
- The flexibility of the Series LLC structure can be advantageous if properly established and maintained.