Property is one of the UK’s most exciting and challenging business sectors, and is once again starting to attract new investment not only from institutions, property companies and funds but also from smaller organizations and private individuals. By its inherent nature and value, property can generate substantial returns but is equally capable of incurring substantial losses and even – for the inexperienced or poorly-advised investor – civil or criminal liability.
Property is an exceptionally complex asset class, and a raft of health & safety and environmental protection legislation represents a minefield for investors, owners and landlords of both commercial and residential investment property. It is vital, therefore, that expert legal advice from experienced commercial property lawyers is obtained at all stages in the property investment cycle, particularly on the purchase of an investment property, when proper due diligence is an essential requirement.
- 3 Contract clauses to use when selling a property
- Limited inspection clause
- Choice of an escrow company
- Qualification of buyer
- Prepayment Penalty
Lenders write prepayment penalties into mortgage contracts to compensate for prepayment risk. As the incentive for a borrower to refinance a subprime mortgage is high, many subprime mortgages have prepayment penalties.
A borrower should be aware of the risks associated with a prepayment penalty. A prepayment penalty can substantially increase the cost of refinancing a mortgage when it would otherwise be economical.
The sole trader or simply a proprietorship is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business.
- It is easy to organize the needs only small amounts of capital need to start and run a business.
- It permits a high degree of flexibility for the owner since he/she is the boss of the business establishment.
- Due to the owner’s unlimited liability, some creditors are more willing to extend credit.
- The owner receives all the profit of the business.
- There is secrecy in sole proprietorship
- Has limited resources. Banks are reluctant to grant loans to single proprietorship considering its small assets and high mortality rate.
- Unlimited liability for business debts. The single owner is responsible for paying all debts and damages of their business.
- If the firm fails, creditors may force the sale of the proprietor’s personal property as well as their business property to satisfy their claim.
- When the owner dies, the continuation of the business is difficult, because a new owner must typically accept all liabilities of the business.
- Corporation or Limited Liability Company (LLC)
- Corporation profits are not subject to Social Security and Medicare taxes
- Corporations garner greater acceptance
- Corporations can offer a greater variety of fringe benefits with fewer taxes
- Corporations lower taxes through income shifting
- LLCs have fewer corporate formalities
- LLCs have no ownership restrictions
- LLCs have the ability to deduct operating losses
- LLCs have tax flexibility
Courts have fund that assets of a single member LLC are available to satisfy personal creditors of the single member.
- Ahan v. Modanlo
- Ashley Albright
- Cognex Corp. v. VCode Holdings, Inc
Series LLC is a master or holding LLC with several LLC’s under the umbrella. In theory, an LLC can use each series to hold a separate asset, like property. A series LLC allows a company to separate and protect multiple assets without forming more than one company.