Many real estate agents represent investors and owners who take the time to form California Corporations or Limited Liability Companies (LLC) for their real estate endeavors. Typically, the investor or owner does this to insulate their personal assets from any potential liability associated with their real estate holdings. With the multitude of risks in the current real estate market, the time has come for realtors to consider the benefits of forming a corporation or LLC for their own business dealings.

Real estate agents are on the front lines of today's real estate market. Buyers and Sellers alike rely on their realtors for many different kinds of advice. Some treat their agents as a confidant; others ask for legal or tax advice. While the creation of a tight relationship can lead to a great source of business, it can also lead to a lawsuit. Real estate agents can be sued for a number of reasons such as fraud, breach of contract, non-disclosure and for things many realtors fail to consider such as damages stemming from a car accident while driving clients from house to house. Like any business, real estate agents simply must take proper steps to protect themselves.

Realtors often ask why they need to form an LLC or Corporation for their business activities. The answer is for protection from risk. The real estate profession, has certain inherent risks. Disputes relating to representations made or fiduciary duties owed, create a need for sound liability protection. While some risks can be covered by insurance, forming a LLC or corporation is a good decision for any agent who needs liability protection beyond standard insurance.

While error and omissions insurance is a great place to begin, real estate agents must not allow insurance to be their only line of defense. This is especially important since, without additional protections, a realtor may be forced to sell personal assets to satisfy any judgment in excess of their insurance policy limit.

Although forming a corporation or LLC will not stop someone from filing a lawsuit, it can eliminate the effect any judgment may have on the realtor's personal life and assets. Moreover, in addition to liability protection, the use of a proper LLC or corporation can result in tax savings which will keep more money in the realtor's pocket. Additionally, the use of an LLC or corporation could result in an elevated status amongst realtors thereby giving one agent an upper hand over another resulting in more new clients. Although every situation is different, a realtor has nothing to lose by speaking to their local attorney regarding forming a LLC or corporation.

Amir H. Afsar, Esq. is an attorney and founder of Afsar Law Group, A.P.C. which represents clients in business, real estate, construction, and estate planning matters throughout the Coachella Valley including Indio, La Quinta, Bermuda Dunes, Indian Wells, Palm Desert, Rancho Mirage, Cathedral City, Palm Springs, Banning, Joshua Tree, and other cities located within Riverside and San Bernardino County. Mr. Afsar can be reached at Afsar Law Group, A.P.C. at 760.345.3110.