Series LLC Texas
Texas Series LLC in Real Estate & Business
Texas Series LLC Formation
The Series LLC is a form of limited liability company that allows real estate investors to own multiple assets and sort each property into a separate compartment that is insulated from other properties owned by the investor. In the past series LLC was only available for mutual fund and asset securitization industries. Now series entities have become available for real estate investors in several states including Texas.
Definition Of A Series Company
Texas Series LLC Statute
With a series LLC, you can hold assets and liabilities within separate cells or series such that they function as sub-companies. But the individual cells are not considered as stand-alone legal entities but rather act as stand-alone legal entities. That means that each cell or series can:
- File and defend lawsuits
- Buy, sell and hold title to property
- Enter into contracts
- Grant liens and security interests
- Choose to obtain an EIN in order to treated as a separate taxpaying entity
- Have its own bank account
- Operate under its own assumed name
The liability protection that comes with a series LLC is important to many investors, because if a series is sued then any liability within that series does not spread to other series or the company at large.
Series LLC Laws
Convert LLC To Series LLC Texas
The legal authority of the Texas series LLC is described in Chapter 101 of the Business Organizations Code (BOC). Section 101.601 and 101.602 read as follows:
Section 101.601. Series of Members, Managers, Membership Interests, or Assets
(a) A company agreement may establish or provide for the establishment of one or more designated series of members, managers, membership interests, or assets that:
(1) has separate rights, powers, or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations; or
(2) has separate business purpose or investment objective
(b) A series established in accordance with Subsection (a) may carry on any business, purpose, or activity, whether or not for profit, that is not prohibited by section 2.003.
Section 101.602. Enforceability of Obligations and Expenses of Series Against Assets
Series LLC Texas Cost
(a) Notwithstanding any other provision of this chapter or any other law, but subject to Subsection (b) and any other provision of this sub-chapter:
(1) the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to a particular series shall be enforceable against the assets of the series only, and shall not be enforceable against the assets of the limited liability company generally or any other series; and
(2)none of the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to the limited liability company generally or any other series shall be enforceable against the assets of a particular series.
(b) Subsection (a) applies only if:
(1) the records maintained for that particular series account for the assets associated with that series separately from the other assets of the company or series;
(2) the company agreement contains a statement to the effect of the limitations provided in Subsection (a); and
(3) the company’s certificate of formation contains a notice of the limitations provided in Subsection (a).
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Texas Real Estate Lawyer FAQ
What is a Series LLC in the state of Texas?
A Series LLC, as defined by Texas law, is an LLC that establishes a series of members, managers, membership interests, or assets that have separate rights, obligations, and liabilities, as well as business purposes, from the general LLC.
Differences between an LLC and a Series LLC?
A Series LLC is a typical corporate entity that has been set up to hold multiple properties or interests under one umbrella. A restricted LLC, on the other hand, was designed to transfer assets within a family and is not intended for commercial purposes.
What is the benefit of a Series LLC in Texas?
The Series LLC can assist firms safeguard their assets from liability, and it can do so for less money and with more flexibility than alternative liability-mitigation arrangements such as holding companies or parent-subsidiary structures.
Is a Series LLC the same as a holding company in Texas?
Holding corporations prefer the series LLC corporate structure. A holding corporation doesn't run businesses; it just exists and owns them. The holding company would own all of the individual series under its cover as a series LLC. A distinctive property can be owned by each series in the series LLC.