Do not think because you have you properties under an LLC or Corporation that  you can let them fall into disrepair. A judges ruling in Buffalo, New York says that you can be personally liable if you allow your properties to fall into disrepair as Joy Drati found out. He was extricated from California and now  faces 1 year and a million dollars in fines for having several hundred housing code violations at his Buffalo rental units which he bought over the internet.

The judge’s decision determined that the defendant could not be protected by a corporate veil “because the codes define ‘owner’ to include parties in control of the properties, not just title owners”
“You can’t hide behind an LLC to avoid correcting violations at properties and rehabing properties that you buy,” Savage said.
The determination that Drati was also the agent in charge of the properties, not just the owner, was the deciding factor.
However, Drati’s attorney, Alan Goldstein, said they plan on appeal the ruling.
“He pled guilty on all the city charges, not because he is guilty, but because the judge ruled that he acted in the capacity of the agent of the LLC,” he said.
Goldstein continues to argue that Drati is not responsible for the properties’ conditions which led to the violations cited.  via Business First of Buffalo.

Real estate is a business that you need to be close to your assets or have agents that you trust implicitly. Obviously this person thought that distance and an LLC would let them get away with skirting the legal obligations he had towards his tenants. What a hard lesson to learn.

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