Zero Risk Real Estate: Creating Wealth Through Tax Liens and Tax Deeds

Corporate Investing

As you start to pursue this more, you will want to provide some additional security for yourself and your family. When you purchase a tax lien or tax deed, you are typically doing so in your own name. That means you can be held personally liable in the event of any issues with the property. While these situations are very rare, they might include any injuries that occur on the property, existing liens, environmental issues, and other concerns.

You may be able to avoid bearing personal responsibility for what goes wrong by forming a corporation or similar legal entity such as an LLC (Limited Liability Company). This cannot be simply in name only. The corporation must have a separate bank account, hold regular meetings, keep accurate records, and conduct business separate from the personal dealings of shareholders and/or owners. Failure to adhere to these rules could result in the court doing what’s called piercing the corporate veil, which means the corporation is seen as nothing more than a transparent attempt to shield yourself, and the law will therefore bypass that corporate veil and hold you personally liable.

This can be a bit complex to navigate, and it is best to consult an attorney or other expert to manage the process for you. It’s important that this formation be handled carefully, so that you don’t leave yourself vulnerable to liability.

Some states have stricter requirements for setting up an LLC. In these situations you can use a subchapter S corporation ...