Is a single-member LLC a suitable business entity for a real estate investment company created to acquire and hold residential properties?

Answered by Thomas Moorhead, Atty at Law, Owner of RealCheck America, Inc.
Yes, a single-member LLC (limited liability corporation) is suitable for a real estate investment company. This is an excellent way to limit liability to the corporation, rather to you or your other business interests. The fact that you will be a single-member actually makes it very uncomplicated to create.

This additional information was passed along to us by an observant landlord:

A limited liability company (LLC):

• is a type of business ownership combining several features of corporation and partnership structures
• is not a corporation or a partnership
• may be called a limited liability corporation,
• the correct terminology is limited liability company owners are called members not partners or shareholders
• number of members are unlimited and may be individuals, corporations, or other LLCs

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I have a rental unit in Pennsylvania and I was told that it was against the law to collect late payments . My tenant got behind last year and he now pays me additional money each month but his late fees now are over and above the back rent by $1400.00. Is is lawful to do this.

Answered by Thomas Moorhead, Atty at Law, Owner of RealCheck America, Inc.
Yes, it is lawful to collect late fees. The only issue is whether you late fees are reasonable. As a general rule, late fees of 5 percent to 10 percent are reasonable. You are entitled to charge and collect late fees for each month that the rent is late. Because your tenant is paying on back rent, you need to keep him informed as to how much he owes in past due rent and late fees.

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I am a homeowner who has a "mentally unstable" tenant. I got her through a roommate finding service ("Roommate Express"). Unfortunately, I actually had her sign a six month lease (only two months are done). I, and another roommate, have been living with her for the past two months. Living with her is raising my blood pressure. I live in fear in my own home. I won't go into the wierd/crazy stuff she does. I don't think any of it breaks lease rules though.

Anyway, the deal is that she really hasn't broken too many "obvious" rules. She still hasn't paid her $150 deposit, although the rental agreement is signed and she moved in about two months ago.

My first idea is to offer to pay her some money if she'll leave at the end of March, since I'm not sure if I can kick her out yet. If that doesn't work (which it probably won't), then I need to know "exactly what I need to be able to evict her."

Please answer the following questions:
1) Basically, how can I use the fact that I know she'll be late on rent payment by a day or two? Can I use the fact that she hasn't paid her deposit yet to evict her? Do I have to give her warning letters first? My lease only mentions that she's fined a certain amount if she's late. I seem to remember an eviction warning when I was late on my old
apartment rent payment, yet that is where I got my current lease that I typed up.

2) Are rules handled differently because I'm a homeowner and have to actually "live" with the person?

3) What kind of lawyer would I need and what would I expect to get charged?

Answered by Thomas Moorhead, Atty at Law, Owner of RealCheck America, Inc.
Your first problem is the fact that you are using a residential lease agreement rather than a roommate agreement. When you allow someone to live with you as a paying roommate, then you should use a roommate agreement. This is because you are living and using the same space as your roommate. It is my policy not to give a specific legal opinion based on your lease.

However, to give notice and have a tenant removed for non-payment of rent, you need to have the rent not paid. The fact that it is a day or two late will not be sufficient to evict. If you have the right to evict for non-payment of the security deposit, depends on your lease. The copy you provided to me is blank. Unless you have specific language in your agreement, you cannot evict of the non-payment of the security deposit. This is why you should always get your security deposit up front and paid in full. You may attempt to make a deal with your tenant so that she will move without a Court hearing. You may offer her money or to immediately return that portion of the security deposit that she paid.

You need to hire an experience landlord/tenant attorney. You will generally be charged by the hour with rates varying from $90.00 to $350.00. Ask any of your landlord friends who they use or go to the Court House where you file your eviction lawsuits and ask for names.

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Our renter has been paying late after the second month of moving in. This is the 4th month that they have lived there. Rent was due on the 1st and they still haven't paid. They have 4 children from 2 to 6. We have left word for them to contact us, we've gone over to talk with them and still no reply. What are our options?

Answered by Robert Cain, Publisher of the Rental Property Reporter
It looks as if you will have to proceed with an eviction for nonpayment of rent. From your return email address I assume you live in Georgia. Check Georgia law to find out exactly how to proceed with the eviction. This is extremely important, because if you don't do it right, your tenants could get to stay rent free for some time.

Your filing the eviction could also prod them into paying the rent. Often tenants only pay the bills from those parties who make it clear that it is important. Filing the eviction could make them decide that your bill is important. If you don't already have a copy of Georgia law, you can access it at http://www.rentalprop.com/ltlaws.htm.

And shame on them for endangering the welfare of their children by risking being evicted.

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We are selling our rented house with the closing date after the lease is done. Now our tenants are threatening to damage the house and make harrassment calls in the middle of the night because they do not want to move out when the lease is up. They refused us access to the house for the new-owners to be to able to estimate the cost for their loan for the home improvements even though in the lease we have only 24 hour notice, we gave them several days notice. That's when the threats started. Can we evict them for 1. breaking the lease 2. Threatening property damage & the harassing?

Thank you.

Answered by Robert Cain, Publisher of the Rental Property Reporter

They have probably violated the terms of the lease by refusing entry and risk being evicted as a result. They have not done any damage or made any middle-of-the-night calls, so far, and as a result all you have is hot air and no grounds for eviction. Your remedies are undoubtedly spelled out in the language of the lease. Make sure you follow them to the letter or you will likely lose the eviction.

In addition because your tenants are disrupting the sale of the property, you could sue them for restraint of trade, as well. What you chances of winning the suit are, I couldn't tell you, but the threat of the suit could bring them around fairly quickly.
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I would like to know who would be responsible for repainting a single apartment unit. The tenant is currently living in the unit and wants to repaint the interior walls. Is the tenant responsible or is the landlord? The unit is HUD Housing located in Shelby, Montana. I would like to know for the sake of the individual that I am assisting. She is
elderly and developmentally disabled. Please respond. Thank you.

Debra Y

Answered by Robert Cain, Publisher of the Rental Property Reporter

There is no set area of responsibility, it depends on the circumstances.

If the need for painting is the fault of the tenant, then the tenant is responsible. If the unit needs painting due to ordinary wear and tear, the responsibility is the landlord's.

In subsidized housing a HUD inspector is supposed to inspect the property once a year to determine if it is "habitable." One of the items checked is the condition of the paint. Chipped and peeling paint must be corrected. Apparently that was not the case with your apartment unit.

A regular maintenance schedule would dictate when units are to be repainted. One landlord I know figures interior paint should last about four years. Anything short of that he charges the tenant for, pro rata. After four years he figures it as a cost of doing business.

If a tenant just wants to paint to make the unit more attractive, you might consider buying the paint (probably no more than $30 for a small apartment) if the tenant will do the painting. Here you are taking a risk in assuming that the tenant actually knows how to paint properly, including removing outlet covers and switchplates, not painting over hardware, etc. In addition you need to have veto power on the paint color. Sometime or other you are going to have to re-rent this unit, and if the walls are deep purple it will require much repainting or finding someone who is partial to that color.

Painting a unit for a good tenant is also a great way to keep him or her. Do something nice for him or her and you are more likely to have longer retention.
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I have a tenant who did not pay rent. I took the tenant to eviction court in Denver, CO on Feb 14th, and won to get possession at the end of the month. The tenant is now calling me offering me rent. Can I accept the rent and still proceed with executing the eviction at the end of the month, or does accepting rent for this month, even though the judgement in my favor has already gone through, void the entire eviction process?

Thanks, Fleming

Answered by Thomas Moorhead, Atty at Law, Owner of RealCheck America, Inc.
No, you may not accept rent and proceed with the eviction. Whenever a landlord takes a tenant to Court for nonpayment of rent, the tenant has the right to pay the rent, in full including all court costs, to avoid being evicted. This is if the tenant pays within the redemption period. If the tenant offers to pay in full and you do not accept the same, then the tenant could pay into the Court which will, also, stop the eviction proceedings. If you can get all your rent, then take it and let the tenant stay.

I inherited from my father a limited partnership share in an apartment building. At the time of his death, the partnership was teetering toward bankruptcy because a balloon was due and refinancing was difficult. I had to keep my share because I could not find a buyer. However, they were able to refinance, made some capital improvements and now the business has just turned the corner and is starting to pay dividends. The general partners now are interested in buying my share. What kinds of things should I be looking at to decide if I want to sell or keep my share?

Thanks in advance.

Christine McM

Answered by Thomas Moorhead, Atty at Law, Owner of RealCheck America, Inc.

Limited partnerships are generally used to give the limited partners tax benefits (being able to deduct for losses and depreciation) and to limit their exposure to any liability which cannot exceed the amount of money that they have invested. The income tax consequences involve whether such deductions will require the limited partner to complete a AMT (alternate minimum tax) form which could increase their income tax liability. Further, if the partnership begins making money, then you must declare such dividends on your personal income taxes. Further, as you have experienced, limited partners may have a difficult time selling their interests. However, your share of the limited partnership could increase in value and be worth more money when you sell if a profit is being made. I would look at the amount of money that is being made and compare it to the initial investment made and the amount of money that the general partners are willing to pay you for your interest. Unless you are able to make a profit in excess of what you could earn in other investments, such as the stock market, etc., then I would look at selling.

Shenelle J

Answered by Thomas Moorhead, Atty at Law, Owner of RealCheck America, Inc.

As a general rule, a lease is a legal contract that is enforceable by both parties. Therefore, a landlord does not have the right to "break" the lease without being liable for damages to the tenant. You may, always, offer incentives for your tenant to move. While I generally do not recommend incentives, it is acceptable in this case because the tenant has the legal right to occupy the rental property during the term of the lease. The fact that the tenant was given a sixty-day notice to vacate the premises does not change the fact that the tenant has the right to stay until the expiration of the contract. If you break the lease, then you would be liable for damages to the tenant which could include moving fees, any increase in rent that the tenant may have to pay, etc. So, try and negotiate with the tenant and make sure that if you reach an agreement that the tenant signs a release.