🚨 Why NY Real Estate Investors Are Prime Lawsuit Targets
Owning real estate in New York can be highly profitable, but it also comes with serious legal risks. Whether you own rental properties, commercial buildings, or development projects, you are a prime target for lawsuits.
New York has some of the strictest landlord-tenant laws and high litigation rates, making asset protection a must-have strategy for investors. Without the right legal structure, your personal wealth—including your bank accounts, other properties, and investments—could be at risk.
Top Lawsuit Risks for NY Real Estate Investors
✅ Tenant lawsuits – Slip-and-fall claims, habitability issues, wrongful eviction claims.
✅ Creditor claims – Mortgage disputes, unpaid contractors, property liens.
✅ Foreclosure & deficiency judgments – Personal liability for defaulting on loans.
✅ Structural failure lawsuits – A balcony collapse, elevator malfunction, or gas explosion could lead to multi-million-dollar liability claims.
✅ Fire or carbon monoxide poisoning – If tenants are injured or killed due to fire code violations or a malfunctioning carbon monoxide detector, you could face $1M+ in damages.
✅ Severe personal injury lawsuits – A tenant suffering a traumatic brain injury (TBI) or paralysis due to negligence could wipe out an entire real estate portfolio.
✅ Zoning & regulatory enforcement penalties – Illegal short-term rentals, building code violations, or ADA non-compliance can lead to crippling fines and lawsuits.
If you own real estate in New York, the question isn’t if you’ll be sued—it’s when.
🚨 High Net Worth Professionals Face Even Greater Risk
Many real estate investors are also high-income professionals in fields like medicine, finance, and law. If you’re a practicing OB/GYN, you already have one of the highest malpractice risks of any medical specialty.
• OB/GYNs are sued at alarmingly high rates – Over 60% of OB/GYNs face at least one malpractice lawsuit in their career.
• A malpractice claim + a real estate lawsuit = financial disaster – Without proper asset protection, a multi-million-dollar legal judgment could strip away both your medical practice income and your real estate portfolio.
• Plaintiffs will go after ALL your assets – If they see that you have a successful medical practice + valuable real estate holdings, they will pursue the maximum financial recovery possible.
This is why high-net-worth professionals who invest in real estate need a serious asset protection strategy.
🔹 Why NY LLCs Alone Won’t Fully Protect You
Many real estate investors believe forming an LLC is enough to protect their assets. While an LLC offers some liability protection, it does not make you lawsuit-proof.
Here’s why relying solely on an LLC is risky:
1️⃣ Charging Order Risk – In New York, creditors can get a charging order against your LLC, meaning they can claim your rental income until their judgment is paid.
2️⃣ Piercing the Corporate Veil – If you don’t maintain proper LLC formalities, a court can disregard your LLC and hold you personally liable.
3️⃣ Personal Guarantees – Many investors personally guarantee their loans, making their personal assets vulnerable.
4️⃣ Fraudulent Transfer Claims – If you move assets after a lawsuit is filed, courts can reverse the transfer.
5️⃣ Single-Member LLCs Are Weak – In many cases, single-member LLCs do not provide strong liability protection against lawsuits.
⚠️ What About a Wyoming LLC?
Some New York investors wrongly assume that forming a Wyoming LLC for their New York properties will protect them. It won’t.
• New York courts apply New York law to NY-based real estate, regardless of where the LLC is registered.
• If you get sued, a judge will not recognize Wyoming’s protections—your LLC will be disregarded in favor of NY law.
• Your best asset protection strategy must be structured in a way that actually holds up in New York courts.
This is why LLCs alone won’t cut it. You need a multi-layered asset protection strategy to truly shield your wealth from lawsuits.
🔗 Read more: Click this link for a deeper dive into asset protection strategies for New York: https://btblegal.com/blog-articles/f/how-to-protect-your-assets-in-new-york-a-comprehensive-guide
🔹 The Best Asset Protection Structure for NY Real Estate Investors
1️⃣ LLCs → Asset Management Limited Partnership (AMLP) → Bridge Trust®
The strongest protection for real estate investors comes from using a layered structure where:
1️⃣ Your rental properties remain in separate LLCs, keeping each property legally distinct.
2️⃣ Each LLC is disregarded for tax purposes and flows into a management entity called an Asset Management Limited Partnership (AMLP).
3️⃣ The AMLP is owned by the Bridge Trust®, but the investor (you) retains management control.
4️⃣ If a lawsuit occurs, the Bridge Trust® can move control offshore, placing your wealth outside U.S. court jurisdiction.
This strategy prevents predatory lawsuits and protects your wealth long-term.
🔗 Read more: Click this link to learn about New York Irrevocable Trusts: https://btblegal.com/blog-articles/f/understanding-new-york-irrevocable-spousal-trusts
🔹 Case Study: A High-Risk OB/GYN Facing a $1M+ Real Estate Lawsuit
📌 Case: Brown v. Landlord LLC (2023)
• A New York OB/GYN invested in a multi-unit rental building in NYC as part of his wealth-building strategy.
• A gas leak in one of the units caused an explosion, leading to severe burns and lung damage for a tenant.
• The tenant sued, and the court awarded $1.5M in damages.
• The doctor’s LLC was single-member, and the court pierced the veil, allowing the plaintiff to seize his personal assets, including his real estate and medical practice earnings.
What Could Have Prevented This?
✅ Multi-member LLC with proper formalities (stronger legal protection).
✅ LLCs → AMLP → Bridge Trust® (placing assets out of reach).
✅ Properly structured equity stripping (so no visible equity remained).
This is why NY real estate investors who are also high-risk professionals need advanced asset protection strategies—one lawsuit could wipe out their entire financial future.
🚀 The Best Time to Protect Your Assets is BEFORE You Get Sued
If you are a high-net-worth professional who invests in New York real estate, you are a lawsuit target. Don’t wait until a lawsuit is filed to protect yourself—it’s too late.
✅ Here’s What to Do Next:
1️⃣ Evaluate your current legal structure – Are you at risk?
2️⃣ Implement a multi-layered protection plan – LLCs alone won’t cut it.
3️⃣ Consider using the Bridge Trust® + AMLP – The strongest legal protection for high-risk professionals and real estate investors.
📞 Need a legal asset protection strategy session for your NY properties? Contact us today for a private consultation with an asset protection attorney at (888) 773-9399.
By: Brian T. Bradley, Esq.
