Commercial Real Estate Finance

Posts Tagged ‘lawsuit’

Many times, when an individual, or a large developer/operator purchases a commercial property, they buy it through a limited partnership or limited liability company.  There are many reasons as to why they do this.  Anonymity is one.  Most wealthy people are private, and do not want to be bothered, whether it is by brokers or any other third party looking to drum up new business.  Probably the chief reason, however, has to do with tax law, as property level gains are not attributed the same way to the individuals who are members of the LP or LLC as if they owned the property outright as individuals.  Essentially it provides a corporate veil of ownership, both in terms of who actually owns the property, as well as how Uncle Sam views its capital gains/losses.  Furthermore, if there is ever an accident, or other mitigating factor whereby a lawsuit is brought upon the owner of a property, it again can help protect the personal assets of the actual owners if they are found guilty of a civil lawsuit, limiting the plaintiff solely to property level monies. But wait, there’s one other big reason single purpose entities (SPE’s) exist… and it isn’t to protect the owner. Read the rest of this entry »

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