What Jurisdiction and Law Applies if my Wyoming LLC is Sued Over Real Property it Owns?

What Jurisdiction and Law Applies if my Wyoming LLC is Sued Over Real Property it Owns?

A common use of a Wyoming LLC is to hold real property.  If that property is commercial in nature (e.g., an apartment or office building), there is a greater chance that the LLC could be sued.  When that happens, which laws apply will depend on several factors.

An important factor is, why is the LLC being sued?  Some common possibilities are: 1) an accident or dispute related to the property itself (e.g., a visitor is injured, or a right of way access is disputed); 2) a contractual dispute (e.g., violation of a lease agreement or mining rights contract); and 3) a creditor is attempting to reach the LLC’s assets in order to satisfy a debt of the owner of the LLC.  Additional factors may also be important.

No matter the reason for the lawsuit, it is always important to contact an attorney immediately upon learning of a lawsuit, so that it may be responded to in an appropriate and timely manner.

Usually, if a lawsuit involves an incident or dispute related to the property itself, the proper jurisdiction is the county where the property is located.  The local State’s laws regarding that type of injury or dispute would probably apply.  Thus, if a visitor slips on a banana peel, or a neighbor disputes the location of the boundary that will probably be settled in a local court where the property is located.

If the dispute is contractual, then the contract can determine the proper court and laws to use.  For example, most lease agreements may include a clause that states that the laws of a specific State will apply to determine the validity or enforcement of the contract.  They may also have a clause saying that any disputes will be settled in the courts of a specific county of a specific State.  Virtually any State’s laws and courts may be chosen; Courts will typically honor the agreement of the parties in their contract. 

If a Wyoming LLC owns commercial real property, a valuable tool in protecting that asset is a lease agreement that is properly drafted to include such clauses.  Thus, a Wyoming LLC could own property in New Jersey, but have a lease agreement with tenants requiring lawsuits to be brought in Laramie County, Wyoming.  A lawsuit brought in New Jersey on such a contract could be defended with the argument that it should be dismissed, so that it can be filed in the proper Wyoming court.

If a lawsuit is attempting to seize a Wyoming LLC’s assets in order to satisfy the debt of an owner of the LLC, you should retain an attorney.  Typically, a creditor would need to domesticate the judgment in a Wyoming court. However, Wyoming LLC law limits creditors to a single remedy, that of a charging order. A charging order acts much like a garnishment on an owner’s right to receive a distribution of profits.

If your Wyoming LLC owns commercial property of any kind, it is worthwhile to consult an attorney to be sure any lease agreements or other contracts include language that keeps disputes in Wyoming.  Both the LLC and the contracts can be valuable asset protection tools, if used properly.

Wyoming commercial law provides for a number of LLC tax advantages a number of advantages over companies in other states. You can order an LLC online through Wyoming Corporate Services Inc web site at:

www.wyomingcompany.com

 

The materials in this article have been prepared by Graham H. Norris, Jr. for informational purposes only and are not legal advice or counsel.  Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship.  Readers should not act upon any information in this circular without seeking professional counsel.  The information provided herein is provided only as general information, which may or may not reflect the most current legal developments.  This information is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice or to substitute for obtaining legal advice from an attorney licensed in your state.  Graham H. Norris, Jr. does not wish to represent anyone desiring representation based upon viewing this material in a state where this information fails to comply with all laws and ethical rules of that state.  Any review or other matter that could be regarded as a testimonial or endorsement does not constitute a guarantee, warranty, or prediction regarding the outcome of an individual=s legal matter.  The Wyoming State Bar does not certify any lawyer as a specialist or expert.  Anyone considering a lawyer should independently investigate the lawyer=s credentials and ability, and not rely upon advertisements or self-proclaimed expertise.  Graham H. Norris, Jr. is a member of the Bar in California, Utah, Idaho and Wyoming.  For more information, please contact Mr. Norris by telephone at 307-633-3545.