RENT Magazine Q3 '21

shareholders. Odds are good that you, like most AAOA members, have fewer than 34 partners and you don’t control a public company. “But I own my properties in LLCs, not corporations,” you say. “I’m ok, right?” Here’s the state of California’s answer to your question – from Section 17703.04(b) of its Corporations Code: " A member of a limited liability company shall be subject to liability under the common law governing alter ego liability, and shall also be personally liable under a judgment of a court for any debt, obligation, or liability of the limited liability company, whether that liability arises in contract, tort, or otherwise, under the same or similar circumstances and to the same extent as a shareholder of a corporation may be personally liable for any debt, obligation, or liability of the corporation ..." [emphasis added]

In fact, the Court of Appeals for Division 3 of the 4th District of California allowed CBRE (the nationwide commercial real estate services company) to collect a judgment against the individual members of an LLC after it had been dissolved: "… the Court held that CBRE was permitted to enforce its judgment for the commission due under the listing agreement against each of the members of the dissolved LLC to the extent that each had received its portion of the distribution of the proceeds of sale from the LLCs property." 1 “OK,” you say, “but my LLC was formed in Nevada, not California. It’s well-known that Nevada’s LLC Act offers much better protection from the claims of creditors than the laws in states like California do. Right?”

Case: CB Richards Ellis, Inc. v. Terra Nostra Consultants. California Court of Appeals, 4th District, Division 3. October 7, 2014. Reported at: (accessed 5/25/2021) 1.

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