News of Sham Real Estate Companies’ “Bad Acts” a Lesson for Real Estate Investment Companies.

Today the ABAJournal reported the following article: “Deed thieves use sham companies to hide their identities”

According to the ABAJournal:

“Fraudsters are using sham limited liability companies that shield their identities in order to obtain properties without the knowledge or full understanding of the owners.”

Further,

“Some fraudsters search legal notices for delinquent mortgages and then dupe the homeowners into signing over their deeds.”

This unfortunate criminal enterprise underscores a useful aspect of a limited liability company for real estate investors:  privacy.

Michigan law requires Limited Liability Companies to have appointed a Resident Agent.

MCL 450.4207(1)(b) requires an LLC to have a resident agent. A person, or business with a physical presence in the State of Michigan.

Michigan law does not require that an “owner” of the LLC be the resident agent.

“The resident agent appointed by a limited liability company is an agent of the company upon whom any process, notice, or demand required or permitted by law to be served upon the company may be served.” MCL 450.4207(1)(b).

Many of my real estate investment clients will utilize my law firm as resident agent when filing their articles of organization with the State of Michigan.

An example of why this might be useful to a business owner…

A while back I had an investor call into my office looking to contact my client – “Investment Company, LLC”.  This investor was prospecting commercial real estate to purchase, discovered from reviewing the property tax records that the owner of the commercial property was Investment Company, LLC – and that my name was listed as Investment Company, LLC’s  resident agent, through the State of Michigan.

Investor wanted to contact my client’s “decision maker” and see if they would be willing to sell.

I informed my client, and client wasn’t interested in selling. So that’s all I told the investor.

That’s all the investor knew about my client’s identity.

The value of privacy.

Questions? Comments?

email: Jeshua@dwlawpc.com