The series limited liability company, commonly referred to as an “SLLC,” as of 2021 is not available to Florida entities. Although multiple states have enacted statutes to implement the series LLC, the Delaware Series LLC is the standard series LLC for use outside of Delaware. A Series LLC is one LLC that is legally authorized to create separate portfolios of assets and liabilities (the individual “series”) that are protected from claims of both the series LLC and other individual series formed by the series LLC. For example, multiple rental properties can be legally isolated from one another without the need to form a separate Florida llc for each property. Each series may own separate properties, bank accounts, and have different members and managers. The real focus on the series LLC is to isolate debts and claims to single asset portfolios, such as one parcel of real estate, so if there is a liability as to that parcel the remaining parcels, held by a separate individual series, are protected.
The Delaware Protected Series and the Registered Series. We use only the Registered Series. A registered series is also protected, but a protected series is not registered. The main benefit of using a Registered Series is that the State of Delaware will issue a certificate of good standing for the individual series. While the Registered Series was not created with real estate in mind, but instead, was designed for the purpose of allowing an individual series to act as a registered entity under the Uniform Commercial Code, the fact is that many attorneys and title companies remain unfamiliar with the series LLC. Since we are dealing only with a Delaware Registered Series, the name must begin with the name of the limited liability company, including the LLC designation, it may contain the name of a member or manager, and the name must distinguish the series on the records of the Delaware Secretary of State. The naming convention we use is to use the LLC main name, followed by “LLC,” followed by a numeric designation, and followed by either “R.S.” or “Registered Series.” An example of this convention for the name of a fictional LLC, Pacific Holdings, LLC, will result in each series being named, “Pacific Holdings, LLC, Series 1, R.S,” or “Pacific Holdings, LLC, Series 2, Registered Series.”
When deciding to use a Delaware Series LLC, please note the following quote from Section 18-218 of the Delaware Code, “to the extent the records maintained for a registered series account for the assets associated with such series separately from the other assets of the limited liability company, or any other series thereof, then the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to such series shall be enforceable against the assets of such series only, and not against the assets of the limited liability company generally or any other series thereof, and, unless otherwise provided in the limited liability company agreement, none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the limited liability company generally or any other series thereof shall be enforceable against the assets of such series.” The point is that people who choose to use a Delaware Series LLC must maintain separate records for each individual series.
We will set up your Delaware Registered Series with the necessary documents and create governing documents to comply with both Delaware law and Florida or California law depending upon the state of operation. The result will be one Delaware LLC that will file one tax return with one federal tax ID, but it will be able to own multiple assets and each asset will not be liable for debts associated with assets held in a separate series.