The Series L.L.C. - Not a Baseball Video Game - A Great, Money Saving Business Tool

"That sounds like a cool new video game!"

No, sadly it is not, but the Series L.L.C. is a relatively new type of limited liability company available in Texas. Series L.L.C.'s help real estate investors and land owners who acquire multiple properties save money and protect their assests.

Real Estate

A series limited liability company is set up with a "main" L.L.C. This "main" L.L.C. has one or more "series" L.L.C.'s beneath it. An individual series can hold assests, title to property, defend lawsuits and any other rights of a typical L.L.C.

The difference is that each series L.L.C. has its own assets and own liability. If a new property is purchased, it is simple to add another series to the "main" L.L.C. without the expense of forming another L.L.C.

Examples of Series L.L.C.

Here is an example of a typical series L.L.C. structure:

Main L.L.C. - ABC Holdings, L.L.C., a Texas series limited liability company

First Series - 123 Main Street, an individual series of ABC Holdings, L.L.C., a Texas series limited liability company.

Second Series - 890 Main Street, an individual series of ABC Holdings, L.L.C., a Texas series limited liability company.

Advantages of a Series L.L.C.

Cost - The filing fee in Texas is $300 for a L.L.C. In the past each property would be held under a separate L.L.C. for asset protection reasons. Now you pay a one time fee to set up your main L.L.C. and each new property purchased is placed in a series under that main L.L.C.

Asset Protection - Each series is only liable for the debts and obligations of that series. In our example, if 123 Main Street is sued and held liable, a judgement creditor cannot go after the assets of the second series.

How to Setup a Series L.L.C.

Certain provisions of the Texas Business Organizations Code must be included in the initial setup of the Series L.L.C. The company's Certificate of Formation, Company Agreement and any Corporate Resolutions must contain the correct language in order to be effective. Do not use a form off the internet (Forms should generally be avoided; more lawsuits come about because people attempt to save a few hundred dollars and retrieve a form off of the internet). It is far less expensive to hire an attorney to get your company set up correctly than to defend a lawsuit that could have been avoided in the first place.

If you are a real estate investor, or simply own several lots of property, the Series L.L.C. might just be the right gameplan for you.

Give us a call, we're happy to help.