Legal Question in Business Law in Pennsylvania

LLC and personal assests

My fiancee is forming a LLC and starting a restaurant the bank would like us to use our house as collateral. However, we have just purchased the house and there really isn't any collateral. I am not a part of the corporation however, we both hold the mortgage to the house. If something were to go wrong with the corporation would I be personally finacially responsible?

Asked on 1/09/07, 11:08 am

2 Answers from Attorneys

Gerald Hershenson Law Office of Gerald M. Hershenson
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Re: LLC and personal assests

Your liability depends upon the documents you are requiired to sign. The home would be exposed to foreclosure in the event of a default. The Bank may require personal guarantees. Suggest you obtain a lawyer to review what you will be required to sign.

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Answered on 1/09/07, 12:30 pm
Marc V. Taiani AAAL - Allegheny Attorneys At Law
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Re: LLC and personal assests

UNDER NO CIRCUMSTANCES SHOULD YOU SIGN A PERSONAL GUARANTEE!!! DON'T BE AN IDIOT! I don't care how much you love your fiance, taking on personal liabilty means just that, it means exposing you and your fiance to personal liability. In other words say the business tanks...which most restaurants do, especially restaurants with new owners who have never owned or managed such businesses. This means that the bank could possible foreclose on your home if you couldn't meet your financial needs associated to that of the business.

Before you go any further consult with an attorney. In the event you fail to retain legal counsel, be prepared to lose EVERTHING....don't say you weren't warned!

For more information please contact my office at 412.731.0865 or visit my website at www.AlleghenyAttorneys.com. My office offers 1/2 hour free initial consultations.

Sincerely,

Marc V. Taiani, Esquire

AAAL - Allegheny Attorneys At Law, PC

412.731.0865

www.AlleghenyAttorneys.com

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Answered on 1/09/07, 2:20 pm

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