Based on your Lease can you tell who owns, who manages & who sues?

Your lease is where everything begins. And you want to make sure that it clearly identifies who the participants are. Specifically, who the landlord is. And you’d be surprised how many people get this part wrong.

So, when we designate a landlord, it doesn’t matter who necessarily signs the lease. An agent can sign a lease on behalf of a landlord, but the agent may not be the landlord. For purposes of the landlord it’s important that the contract essentially states who the one in charge is.

For example, if you have a real estate agent, and the real estate agent found the tenant, drafted the agreement, took the first month’s rent and the deposit, but isn’t going to manage the rental unit, then it doesn’t sound like they’re the landlord. So, maybe their name should not appear anywhere in that contract except as the agent.

Sometimes people get all mixed up and they don’t understand their own form. They’ll put the real estate agent’s name in place of the landlord, but that real estate agent isn’t running anything. That could cause problems down the line.

Particularly, if the tenant challenges a petition, in which they are being sued by X, but Y is the name that appears on the lease. They don’t know who X is, and then may have a very valid claim. So, get these things straight.

If a Property Management company is collecting rent, is in charge of repairs, sending out notices, you may have an agreement as the owner of the property, that the Property Management company moves forward as the landlord. It happens all the time.

But the question is: does your agreement explain that in the event of the filing of a lawsuit, if their name appears in the petition as the landlord, and that any judgment award they get, gets awarded to them in that capacity?

The Property Management company can disclose in that petition that they serve as a landlord for X. But I know sometimes owners don’t want any mention of their names in an eviction petition. So, you have to clearly work out with your Property Management company how that issue is going to be resolved.

Finally, what happens if I’m managing my own property, but I decided to put my property in the name of my holding company?

Let’s say, I opened up “Garcia Housing 123 LLC.” I did this because,
a. I don’t want to intermingle my commercial assets with my personal assets, and,
b. Should there ever be a lawsuit raised against me, the landlord, I would prefer that “Garcia,” the holding company, be sued, not this Garcia, in his individual capacity.

So, if you want to avoid that, and you’ve set up a holding company to collect rent, handle repairs, and handle notices and things like that, then it makes sense to put them as the landlord. This could serve as a good shield between you personally and you as a commercial entity.

If this blows your mind, and you are more confused now than you were at the beginning of reading of this blog, you need to sit down and talk to somebody about the way that your property is managed. You want these things to be clear. You also want it to work within your goals and the path that you set for yourself.

But if your lease doesn’t match the deed and the deed doesn’t match what you thought you were doing, or how you’re advertising yourself, that situation can get you into so much trouble because these are just not in sync. Get one game plan and use that plan, and you’ll avoid problems, I promise.