Legal Question in Real Estate Law in Maine

Re: summer rental

My immediate suggestion is for you to consider establishing an LLC to hold the property. An LLC is a "Limited Liability Company", and is basically the same idea as a corporation, but it is taxed like a partnership, which is essentially what you and your family members are doing.

The benefit of establishing an LLC in this situation is that any renters would wanted to sue the owners would have to sue the LLC, and not each of you personally. In addition, although you should maintain proper insurance on the property, and judgments won by a renter for injury would be against the LLC and your insurance, and each of your family member's personal assets in Alabama would be protected.

Other benefits for tax purposes are the business-tax issues for the property that the LLC can take, (your accountant should guide on this, I can refer you to a local accountant if needed), and perhaps just as important an benefit is the transferability of the property in the future.

What if/when one of you wants to get out of the property? How about if someone wants to let another family member join? The situation can be awkward in determining how much $ interests are worth, but with an LLC the Operating Agreement can spell out ahead of time how the valuation will be determined, and then the member's shares are transferred between LLC members, instead of a deed having to change hands.

Part of my law practice is the establishing and serving as local agent for LLC and corporations. The approximate cost would be $950, including all fees. Feel free to email me directly at [email protected] or call me at 207-767-4824 if you would like to discuss further how to set up ownership of the property.