A new Florida case gives us a good reminder about LLCs, asset protection, and how people should actually use them.
In Aisha Jhaveri, LLC v. Rivas, Case No. 4D2025-0066, the Fourth District Court of Appeal addressed whether an individual could be held personally liable for obligations tied to an LLC. The court confirmed the basic rule: piercing the corporate veil is not easy.
To impose personal liability on someone associated with an LLC, you generally need proof of three things:
- The individual dominated and controlled the entity so much that the entity had no separate existence;
- The entity was used fraudulently or for an improper purpose; and
- The improper use of the entity caused the claimed injury.
That matters because many people assume that if an LLC is operated casually, the owner is automatically personally liable. Not necessarily.
In this case, the court found that careless use of similar entity names, some commingling, and poor business practices were not enough by themselves. There still needed to be evidence that the LLC was used for an improper purpose and that the improper use caused the damage being claimed.
So what is the practical takeaway?
An LLC can be a very useful tool, but it should be used for the right reason and treated the right way.
For real estate, LLCs often make the most sense for rental properties. A rental property has people, guests, tenants, vendors, repairs, lease issues, maintenance problems, and other activity happening at the property that may be outside of the owner’s direct control. That is exactly the type of situation where separating ownership into an LLC may be worth considering.
An LLC is usually less valuable for a second home that is only used personally. There may still be reasons to consider one, but the liability risk is often different than with a tenant-occupied rental.
An LLC is generally not suggested for a primary residence. In Florida, you cannot receive the homestead exemption if the property is owned by an LLC. More importantly, Florida homestead protection can provide extremely strong creditor protection for a primary residence. In many cases, putting a primary residence into an LLC creates more problems than it solves.
And if you are going to use an LLC, treat it like a real business.
That means:
- Open and use a separate bank account for the LLC.
- Have leases signed in the name of the LLC.
- Have rent paid to the LLC.
- Pay property expenses from the LLC account.
- Keep records.
- Avoid using the LLC and your personal finances interchangeably.
- Sign contracts clearly in your representative capacity for the LLC.
The case is a helpful reminder that imperfect paperwork does not automatically destroy LLC protection. But that does not mean sloppy practices are a good idea. The cleaner your records are, the easier it is to show that the LLC is real and separate from you personally.
There is also a mortgage and tax issue people often miss.
If the property has a mortgage, you should not simply deed the property into an LLC without reviewing the loan documents and obtaining lender approval. Most mortgages contain due-on-sale language, and transferring the property without consent may create a default issue.
Even if the lender gives permission, there may still be documentary stamp taxes due on the transfer. In Florida, documentary stamps may be due at a rate of $0.70 per $100.00 of the outstanding loan balance when mortgaged property is transferred.
This is not just a theoretical issue. I recently had a client contact me because the State sent her a demand letter for unpaid documentary stamp taxes from a transfer that occurred two years earlier. The letter included the tax, penalties, and interest. Understandably, it scared them.
That is why these transfers need to be reviewed before the deed is recorded.
The bottom line is simple: LLCs can be a great tool, especially for rental properties, but they are not magic. Use them for the right properties, set them up correctly, get lender approval when needed, understand the documentary stamp tax consequences, and then operate the LLC like an actual business.
The goal is not just to create an LLC. The goal is to create a structure that still works when someone later questions it.