The debate about the legality of wholesaling burns brightly on BiggerPockets and the rest of the Internet. I’ve said my peace on the matter before, so today I want to talk about something different: deceptive practices. Wholesalers often find themselves stretching the truth to close the deal, whether it’s misrepresenting that you’re the end buyer, or even […]
Continue ReadingCLF Blog
Should You Use a Series LLC? Exploring the Pros and Cons
The series LLC is a novel limited liability entity that promises to solve many problems of the real estate investor. This article is meant to highlight some of the pros and cons of using a series LLC in your real estate investment. The Pros The traditional asset protection advice that gets repeated all the time […]
Continue ReadingThomas v. Fletcher: Becoming Your Corporation’s Landlord
Feuding Shareholders: Thomas v. Fletcher Thomas v. Fletcher, a 2006 case out of the Ohio 3rd District Court of Appeals, is a sordid tale of three feuding corporate shareholders, and one man’s struggle to gain the upper hand against two brothers aligned against him. The case briefly touches on the conflict of interest presented by […]
Continue ReadingOwner Finance: Prepayment Penalties Under $75,000 Illegal
Investors selling property with owner finance should be aware that they’re subject to Ohio’s Consumer Sales Practices Act. This law specifically covers individuals or entities that issue residential mortgages or loans to consumers, and would squarely include investors selling property subject to a private mortgage for the purpose of owner finance. Prepayment penalties are controlled […]
Continue ReadingWhy a Single-Member LLC Needs an Operating Agreement
How easy is it to form a single-member LLC? Most investors log onto their Secretary of State’s website, pay their fee and file the state form to create their LLC, and think they’re done. Unfortunately, that’s not the whole story. A limited liability company needs to have rules about operating itself, what happens when it’s dissolved, […]
Continue ReadingMcConnell v. Hunt Sports Enterprises: How the Columbus Blue Jackets shaped LLC law
Back in 1996, the NHL approached the mayor of Columbus about starting an expansion franchise in that city. The subsequent dealings among the partners of the enterprise ignited a legal controversy that eventually led to the award of $920,000 in legal fees, and set a precedent for modifications to fiduciary duty in LLC operating agreements. […]
Continue ReadingFive things your Ohio LLC operating agreement can NEVER do
And how you can get around it. The Ohio law governing limited liability companies generally allows the operating agreement to determine how the LLC is operated. The operating agreement governs the relationship between members, the behavior of managers, and how the members get paid. There are a few exceptions to this broad law that might […]
Continue ReadingPiercing the Veil in Ohio
Understanding Piercing the Veil in Ohio: Liability for LLC and Corporate Owners When a corporation or an LLC causes injury to a party, sometimes the company’s assets are not enough to pay the judgment against the company. When that happens, the injured party often tries to get the owners of the company to pay the […]
Continue ReadingWhy Every Multi-Member LLC Needs a Buy-Sell Agreement
Imagine you and your partner form an LLC. You sign an operating agreement. Several years later, the business is worth several million dollars. Your partner falls on hard times and needs to cash his share of the LLC out. What do you do now? At this point you face the following issues, just to begin with: […]
Continue ReadingDeadlock Provisions in Buy-Sell Agreements
A standard Buy-Sell Agreement might provide for an appraisal prior to a buyout. These agreements don’t anticipate there being a conflict after the appraisal — what happens if the appraisal comes in lower than the departing member expects, or higher than the remaining member expects? What about situations where appraisal of the company’s value is […]
Continue Reading
