In New York, disagreements within real estate LLCs and holding companies often involve significant assets and intricate legalities, highlighting the need for legal representation.
Whether you’re dealing with disputes over shareholder disagreements, breaches of contracts, property rights, or holding companies, we may provide guidance and legal strategies. Contact Richman Law Firm PLLC today for a free consultation.
Understanding Real Estate LLCs and Holding Companies
Real estate Limited Liability Companies (LLCs) and holding companies are legal entities that own, manage, and operate real estate properties. They protect personal assets, offer tax advantages, and facilitate property management. However, their complex structure often leads to legal disputes.
Limited Liability Company (LLC): This business structure combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. It protects real estate investors from personal liability for business debts and claims. Members’ assets are generally protected if the LLC faces a lawsuit or bankruptcy.
Holding company: This is a parent corporation, limited liability company, or limited partnership that owns enough voting stock in another company to control its policies and management. In real estate, holding companies often own properties or other LLCs, protecting the owners from personal liability and providing an efficient structure for managing multiple properties.
Despite their benefits, LLCs and holding companies can be sources of disputes among members or between the entity and third parties. These disputes often involve substantial financial stakes.
Common Property Disputes Between Investors and Real Estate LLCs
Property disputes between investors and LLCs typically stem from the interplay of legal, financial, and operational challenges inherent in the real estate sector. Here are some disputes we may assist with:
Member Expulsion (Involuntary Dissociation)
Member expulsion, or involuntary dissociation, is a contentious process within LLCs. It involves removing a member from the LLC against their will, which can have legal, financial, and operational implications for both the individual being expelled and the LLC as a whole.
The grounds for involuntary dissociation are typically outlined in the LLC’s operating agreement and governed by state LLC laws, often involving breach of fiduciary duties, engagement in illegal activities, fraud, shareholder disagreements, or failure to meet obligations.
LLC Contract Disputes
Contracts form the backbone of LLC operations, outlining each member’s rights and obligations. Disputes can arise over contract interpretation, performance, or enforcement. These disputes can also involve operating agreements, real estate purchase contracts, lease agreements, or service contracts.
Contract disputes within an LLC can be particularly complex due to the intertwining of business and personal relationships among members.
Dissolving Real Estate LLCs
The dissolution of a real estate LLC involves ceasing business affairs, liquidating assets, and distributing remaining assets to members. This process can lead to disputes over asset valuation, debt repayment, and profit distribution.
In some cases, members disagree over whether an LLC should be dissolved in the first place. Shareholder disagreements can lead to legal disputes that require skilled representation to resolve. The dissolution process is typically governed by the LLC’s operating agreement and state law, and both can be difficult to navigate without legal assistance.
Breach of Fiduciary Duty by LLC Members
In an LLC, members owe fiduciary duties to the company and each other. These duties include the duty of loyalty, the duty of care, and the duty of good faith and fair dealing.
Members are to act in the best interest of the LLC and not use their position for personal gain at the expense of the company. They must exercise diligence when acting on behalf of the LLC, deal fairly with each other and the LLC, and not engage in conduct that would harm the company. A breach of fiduciary duty can lead to lengthy disputes within the LLC.
Mismanagement and Negligence Disputes
Mismanagement and negligence can plague real estate LLCs and holding companies, leading to a wide range of disputes. When property management goes awry, whether due to poor financial decisions, inadequate maintenance, or failure to meet contractual obligations, it can jeopardize the investments and interests of all stakeholders involved.
Contact Us for a Free Consultation
Whether you are facing a dispute over member expulsion, contract disagreements, dissolution of an LLC, or shareholder disagreements, we can assist with strategic advice and representation to LLC and holding company members in New York City.
We are committed to working closely with clients to explore all legal options and help you make informed decisions. Contact Richman Law Firm PLLC today for a free consultation.
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Meet Mr. Richman
SCOTT B. RICHMAN, ESQ.
Mr. Richman is the Managing Member and Founder of Richman Law Firm PLLC. In his role as Managing Member, Mr. Richman oversees the day-to-day operations of the firm and handles the litigation of the most complex legal matters across a vast array of practice areas and disciplines.
