Is it necessary to form a corporation to protect myself as the rental property owner?

Caroline: Is it necessary to form a corporation or an LLC to protect myself as the owner of a rental property?
I will be living in the house and renting out three rooms. I have hired a property management company to screen and manage the tenants. I haven’t decided if I want the rental check made out to the property manangement company or to myself. They gave me the option to do both

If I have the checks made out to the property management company, am I more protected from possible law suits that way? I don’t really want to have the hassle of forming an LLC or corporation in order to protect myself. I’m finding this more complicated than I anticipated. Any suggestions or experience would be helpful.

Answers and Views:

Answer by Othniel
Talk to the management company and then to an attorney. Usually the LLC is a way of protecting one’s personal assets etc. Each person has to weigh the pros and the cons and you need information in order to proceed.

Answer by BBG
Having the checks written to the rental agency provides you absolutely no legal protection whatsoever.

You own the home. You are responsible for it’s condition, maintenance and the safety of those who inhabit/visit it. You cannot pawn that off on the rental agency.

You can, however, incapsulate that risk into a corporation (and yes, a LLC is a corporation) and stop the ripple from encroaching upon your own personal assets should the worst happen.

Answer by Ed Atun
It should not be complicated at all. YOu collect the rent. You provide a comfortable place for your tenants to live. In the vast majority of cases, you have no need for a corporation. Notify your insurance company about the renters so you can find out what is covered and what is not covered. Then tell the tenants that their possessions are not covered by a fire in your house. They can get renters insurance.

When you get more experience, you won’t need a management company. You will make a list of 20 questions for all prospective tenants. How long after a dinner would they expect to leave the dirty dishes in the sink. How late would they think it reasonable to play loud music in their room. If your tenants are happy with their living situation, there won’t be any court cases.