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I own several properties under my LLC. Someone was bitten by a dog one of my tenants was illegally dog sitting. The tenant was not allowed to have animals and did not have the renter's insurance required under their lease.

I use a management company who was supposed to oversee that the tenant followed the lease, so to me, it falls under their jurisdiction; they should've ensured that the tenant had renter's insurance. I got a call from an attorney about the dog bite, and I referred the attorney to my management company.

Can I be personally sued for this?

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Anyone can sue anyone else. It's rarely about a courtroom victory - it's about a settlement. Fair or not, it's cheaper for both parties to settle versus battle in court. They will likely sue the management company, the corporation, and you the individual.

Technically you will not be held liable - but that only matters if the dispute hits a courtroom. From Nolo.com:

Like shareholders of a corporation, all LLC owners are protected from personal liability for business debts and claims. This means that if the business itself can't pay a creditor -- such as a supplier, a lender, or a landlord -- the creditor cannot legally come after an LLC member's house, car, or other personal possessions. Because only LLC assets are used to pay off business debts, LLC owners stand to lose only the money that they've invested in the LLC. This feature is often called "limited liability."

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There is a management company, but your LLC hired them and is responsible for their actions. Nobody can be stopped from suing the LLC just because it hired another company. Now if the LLC loses a court case because of actions of the management company, the LLC can sue the management company.

And there's the difference between "my LLC can be sued" and "I can be sued". Your LLC can be sued. If it owns say debt free property worth $1,000,000 and the LLC gets sued for $1,000,000 and loses, the properties are gone, the LLC is worthless. If the LLC gets sued for $2,000,000 and loses the properties are gone, the LLC is worthless, but nobody, including you, has to pay the remaining $1,000,000.

You can personally be sued (under the rule that anyone can sue anyone). You can be successfully sued under very rare circumstances, if your personal behaviour is so bad that the law doesn't allow you to hide behind the LLC. For example if instead of allowing a tenant to keep a dog, you allow them to keep a tiger, and the tiger kills someone. Or if a tenant fails to pay, and you beat them up with a baseball bat. Or possibly if you were repeatedly informed that the management company is run by crooks who regularly have endangered tenants and you stopped your LLC from firing them, because they are cheap.

Edit: This was about personal liability. Obviously you will try to deflect damage from the LLC as well.

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  • Clarification: The LLC would ordinarily bring the management company in as part of the same court case, because the management company may have to pay for it. This has to do with rules dictating who the necessary and proper parties to the case are, and that can vary a little bit under state law. A local litigator can tell you whether you would need to add the management company as a third-party defendant, and you should be consulting one. Note the tenant is also obviously someone you can bring into the case, since they are clearly responsible for the harm caused by the dog bite.
    – Tom
    May 21, 2016 at 16:57

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