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not much precedent as to how these entities will be respected going forward. To begin with, not all state statutes regard- ing the series LLC are identical. Series LLCs are not available in all states, and, where they are not available, each series may not be recognized as a separate entity for state tax purposes. In addition, without guiding case law, it is unclear exactly what type of record keeping, accounting, and other formalities will pre- serve liability segregation among the series and avoid the “piercing” of the liability veil. Likewise, it is unclear what practices would be insuf cient and expose a client to greater than anticipated liability. Thus, the best course of action is to maintain the strictest possible accounting and other record-keep- ing standards to maximize the chance of the limited liability being respected. T is issue is of particular concern with respect to claims involving creditors and other third parties that may not have ade- quate notice of the segregation of assets and liabilities in a series LLC. It remains unclear how Article 9 of the Uniform Commercial Code applies to the series LLC and how a series will be treated in bank- ruptcy. To f le a petition, a specif c series would need to be considered a “person” under the Bankruptcy Code, a designation that includes an individual, partnership, or corporation. If a series does not fall under one of those categories, the series and its stakeholders may not have bankruptcy protection, and bankruptcy courts may consider the assets of all the series to be part of a bankruptcy estate. These uncertainties, and the fact that lenders do not fully understand the issues involved, may also cause dif culties in secur- ing f nancing. T ere is also a question as to whether a series has the legal capacity to hold title to real estate, unless the state provides explicit language. In 2007, Delaware amended its statute to make clear series may own, con- tract, hold title to assets, and grant liens and security interests. Many states, includ- ing Illinois, have followed Delaware’s lead and contain similar explicit language. For those states where the LLC statute is silent, however, there remains some ambiguity. Regardless, it may be possible to limit liabil- ity by limiting recourse under loan docu- ments to a particular series. Although the number of states allowing series LLC continues to grow, real estate owners considering this structure should closely consider the legal uncertainties and business risks involved. Jeffrey M. Friedman is a partner and Kelly M. Greco is an associate with Fox Rothschild LLP. Contact them at [email protected] and [email protected]. GET CONNECTED CCIM Connect is the new members-only communication platform that allows you to: Request and share industry insights that build your business Strengthen the relationships that lead to closed deals Collaborate on documents to ensure best practices Log on at CCIMconnect.com CCIM.com March | April | 2016 19