Attorneys for Landlords ONLY
The Firm does NOT represent tenants (residential). The Firm exclusively represents commercial and residential landlords in Landlord Tenant Law and all other relevant areas including negotiation of lease agreements, renewals, and tenant eviction, among other items.
Commercial Landlord Services
The Firm represents entities that own commercial properties throughout Texas and is available to offer comprehensive transactional and litigation services. Texas law distinguishes between the rights and remedies available to commercial versus residential landlords. It is thus essential that legal counsel understand the legal distinctions and have the experience and knowledge required to effectively represent the clients’ interests. The Firm actively practices in this area and looks forward to working with our clients to achieve their objectives.
Residential Landlord Services
The Firm works with clients to set up the legal structure to insulate property ownership from personal liability. This is an issue that is often overlooked by clients who purchase residential properties to lease in their personal capacity. Such a strategy is perilous as it subjects the clients to personal liability. This can be easily addressed by forming the proper legal entities which own the properties to be leased. A new legal option now available to clients allows for the use of a single entity that can own multiple properties. The Series LLC provides the benefit of a single structure that affords individual legal protection for multiple properties.
Whether our clients are situated at our offices in Dallas, Houston, Austin, Lubbock, Amarillo, Midland, Odessa, Wichita Falls, or Abilene, or anywhere in Texas, we look forward to discussing their legal needs in this area of practice.
If you own residential or commercial rental property in Texas and are thinking about leasing to residential or commercial tenants, I highly recommend that you consult with an experienced residential or commercial landlord attorney in advance. This may be the best advice you will ever receive before starting down what could easily become that long, winding, and very expensive road. Although the rewards are many, the pitfalls are substantial and could easily be avoided with the most basic legal planning. This is not an area where you want to cut corners and go it alone.
Many of my residential or commercial property clients have purchased rental properties as an additional source of income. Typically, the client will purchase a single property in her own name and hire a contractor to get the unit ready to be leased. Assuming this first introduction into residential or commercial Texas leasing and management is successful, multiple properties are acquired over the years and are also owned individually. Unfortunately, owning residential or commercial properties on an individual basis presents a huge legal and financial risk and should be avoided at all costs. Clients often learn this lesson the hard way.
Legal Do’s & Don’ts with Landlord Tenant Law
Here are a few legal dos and don’ts which can increase your chances of succeeding as a residential or commercial landlord in Dallas, Austin, Houston, Lubbock, Amarillo, Midland, Odessa, Wichita Falls, and Abilene.
1. Do NOT purchase residential or commercial properties personally.
Personal ownership of residential or commercial properties exposes the individual to substantial financial risk. Defending a personal lawsuit brought by a residential or commercial tenant can be highly problematic and expensive. Unfortunately, many clients learn this lesson the hard way. They are already stuck in a financial and legal sinkhole when they meander into one of my law offices with a legal problem requiring immediate attention. The problems are many and include lease violations, legal claims brought by tenants, improperly drafted leases, inability to evict non-paying tenants, failure to obtain personal guarantees, and so on. (This is only a partial list!) In this situation, the property owner comes into my office with a liability issue already on the front burner and in need of representation. By the time I get the case, a residential or commercial lawsuit may have already been filed and litigation is already in process. Options at this point are limited to the client as attorney fees must be incurred to defend the lawsuit. The huge issue, of course, is that since the client owned the rental properties personally, he is personally liable for any damages claimed in the lawsuit including attorney’s fees if unsuccessful in court. Tragically, this could have been easily avoided by setting up a proper legal structure before the first rental property was purchased.
2. Use a Legal Entity – an LLC or Corporation – to purchase residential or commercial properties.
I recommend that clients set up an entity that will own the properties to be leased. In this way, the entity – be it a limited liability company or other business structure, will assume the legal liability and not the client. This is critical and is the recommended method of owning, leasing, and managing rental properties. In this scenario, if a claim were to arise, only the entity would have the potential for liability. Critically, a lawsuit filed against the individual could be dismissed.
3. New Legal Options are now available for Residential or Commercial Landlords.
Another important consideration is to avoid cross-liabilities arising from using the same entity to own and lease multiple properties. In the past, lawyers would recommend creating an entity for each property so that one residential or commercial property would be insulated from liability resulting from a different property. A new legal option is now available to our clients which is called the “Series LLC”. This new legal structure available in Texas allows for the use of a single entity to provide separate protection for each individual property. Our clients have found this to be a useful and economic tool.
4. Watch out for restrictions on transfers in Bank loan agreements.
This is an issue that can crop up for unsuspecting property owners who previously purchased the residential or commercial property “personally” and now seek to correct the problem by transferring the property into a newly created entity. Loan agreements typically prohibit the transfer of properties into an LLC or other entity without the prior consent of the lending institution. Your bank will typically approve this transfer but needs to be informed in advance of the transfer and consent to the transaction. Failure to follow this procedure could inadvertently lead to a default under the clients’ loan agreement.
5. Availability of Personal Guaranty.
If your bank is unwilling to allow you to purchase a residential or commercial property via the entity, you might suggest that a personal guaranty be executed to allay any concerns. It is quite common for banks to require that borrowers sign personal guaranties when buying a property via an entity. The key is to insulate the property from claims brought by tenants and third parties, not the bank. If your bank is balking at this suggestion, I would seriously suggest that you find a new lender.
Bottom Line with Landlord Tenant Law in Texas:
Get sound legal advice before buying your first rental property. An experienced residential or commercial landlord attorney can set up the proper legal structure and provide critical advice in the areas of residential leasing and management. Think and plan ahead to avoid being stuck in a legal or financial sinkhole!