However, homeownership is not without risk. If you are facing a lawsuit or a creditor claim, for instance, your property could be placed in sudden and unprecedented jeopardy. However, you don’t have to accept uncertainty as another cost of homeownership. The Alatsas Law Firm has spent years helping New Yorkers protect their assets and keep their properties safe from bad-faith claims.
What’s at Stake in a Lawsuit
A lawsuit or creditor claim can have life-altering consequences. If a court issues an order against you, the claimant could have the right to seize or garnish your assets. These assets could include the following:
- Your car
- Your personal possessions
- Your life savings
Under certain, limited circumstances, a creditor or litigant may be able to seize your house, too.
Real Estate and Legal Claims
The courts in New York typically try to avoid ordering the liquidation of a personal home. However, they may compel the sale of a real property to enforce the terms of an earlier judgment—especially if the debtor, or defendant, has very few other assets.
Your home could be at risk if the property is titled in your name or titled to an operating company.
Your Property Is Titled in Your Name
With the exception of some investors, most people who buy homes have their property titled in their own name. While this can make obtaining loans and credits easy, it could also mean that:
- A creditor can search public property records to find out if you own a home or any other real property.
- If you are sued, whether to satisfy a debt or to recover accident-related damages, your home could be attached to the claim and taken to satisfy any unpaid obligations.
- Litigation involving your real property could also include claims against your personal possessions and other assets.
New York has complicated property laws; however, in most cases, an individually owned home is treated like any other asset.
Your Property Is Titled to an Operating Company
Operating companies and corporations can help protect real properties from creditor claims, provided that homeowners ensure they take the steps needed to separate their personal properties and their business assets.
If you own property in an operating company’s name, it could be at risk if:
- A lawsuit is filed against the operating company.
- A lawsuit is filed or a creditor files a claim against the operating company and its customary business activities.
Using an operating company to hold a personal property can be an effective asset protection strategy, but simply titling a home to a business carries significant risk.
Protecting Your Home From Third-Party Claims
The Alatsas Law Firm could help you protect your property by:
- Establishing a holding company. A holding company, like an LLC, can be used to separate personal assets from business assets. However, under ideal circumstances, the LLC should be formed for the sole purpose of owning or managing the real property. Operating companies only provide asset protection when they do not engage in other business activities.
- Setting up a domestic asset protection trust. Domestic asset protection trusts (DAPTs) allow the trustor to retain access to most trust assets while shielding them from creditor claims. New York does not permit the formation of DAPTs, but a trust established in another state or territory can still hold property in New York.
- Forming an irrevocable trust. Irrevocable trusts shield most trust assets, including real properties, from litigation and creditor claims alike.
You do not have to leave your home to the mercy of creditors. The Alatsas Law Firm could help keep your life’s work safe from even the most threatening claim.