What is the best entity structure for a Commercial Business with real estate?
I was told by a few people to have two separate LLC’s to protect myself. Create a LLC for the Real Estate and let the business LLC Rent the property. Then fill out a Commercial Lease form (in my case is a Texas Commercial Lease form). If I have separate locations, should I create separate LLC’s for all the business locations or just have one Business LLC?
[{"id": "hsjjqt8", "text": "Speak to your CPA and/or attorney before doing anything.\n\nI have been advised by my CPA previously to hold the real estate in a LLC and have your business (S-Corp) pay that LLC rent. If there are multiple properties that you own and your business rents; I would have each property in their own LLC and have the business pay each one rent. I would have separate lease agreements for each property.", "replies": [{"id": "hsjk1h5", "text": "Thank you", "replies": [], "depth": 2}], "depth": 1}, {"id": "hsjnnfw", "text": "For liability purposes, having more LLCs is generally safer. Be clear that any tax benefits are not from LLCs alone.\n\nDo you currently own property that you are leasing to your business? Are there other tenants or single tenant? Do you have debt on the property? \n\nThere is no such thing as Texas Commercial Lease form, are you talking about a promulgated form for use by brokers? otherwise, you should draft your own custom lease.", "replies": [{"id": "hsjpa6j", "text": "Here is the commercial lease form that I found online https://images.kw.com/docs/0/9/8/098329/1179321287127_Samples___Commercial_Lease___5_26_2006.pdf", "replies": [{"id": "hsjpldq", "text": "So if you're signing it with yourself, probably fine since its voidable without a TAR member, but not void per se. Its just not ideal if you want to make any changes.\n\nYou wouldn't be able to sell your property based on that lease, btw.", "replies": [{"id": "hsk9d50", "text": "Just out of curiosity what makes you say the lease is voidable with the absence of a third party? Never heard that before.", "replies": [{"id": "hskel48", "text": "Those leases require a member of TAR to negotiate or use their copyrighted form. It\u2019s right under the title, and has been interpreted to mean a violation means lease is voidable. \n\nThe TAA lease is more explicit with a numbered clause making it voidable by tenant if not a member of TAA. \n\nI can probably look for more authority if you\u2019ve signed this lease in the past.", "replies": [{"id": "hskgdi6", "text": "Not necessary. I use our own forms. I\u2019m just curious on what authority it would be voidable. Contractually, two parties are free to contract however they please (within limits obviously) and I\u2019ve never heard of voidability being at issue due to third party copyright claims. \n\nOr where there is a clause noting it\u2019s voidability what would prevent the contracting parties from simply crossing it out?\n\nI\u2019m not suggesting it\u2019s a good idea to steal third party businesses copyrights my gut just tells me that the voidability piece is a red herring flouted by TAR to scare people. Maybe courts have said that it\u2019s voidable due to public policy? But voidable by who? The party that didn\u2019t bring the form? What if the commercial tenant was the one who offered it up to be used?  \n\nJust seems odd, that\u2019s all.", "replies": [{"id": "hskjcsk", "text": "I hear you. I\u2019m still on mobile but that link is to 2006, I believe newer forms have this clause in Sec. 34G - Copyright: If an active REALTOR@ member of the Texas Association of REALTORS@ does not negotiate this lease as a party or for one of the parties, with or without assistance by an active member of the State Bar of Texas, this lease is voidable at will by Tenant.\n\nIf you strike that clause, then I would agree it should be enforceable. \n\nThanks!!!", "replies": [{"id": "hskjjc2", "text": "Interesting thought activity if nothing else!", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hsk2o1n", "text": "There are many types of structures and each deal will most likely be a little different.", "replies": [], "depth": 1}, {"id": "hszh5zx", "text": "Multi-member LLC to hold the CRE and LLC or S Corp to operate the business RE LLC lease to Business.\n\nKeep all book separate and do not commingle funds.  Treat the two as separate businesses.", "replies": [{"id": "htkcgcv", "text": "Thank you", "replies": [], "depth": 2}], "depth": 1}]