BajaNomad

Good Idea to Register our Vehicle Under our LLC?

BajaMagic - 8-10-2010 at 04:19 PM

Quick Recap - Myself and 2 buddies have a Nevada LLC in which we created for our rental property in Cabo. We just purchased a US vehicle (plan to register in SD), in which we plan to leave in Cabo year around for our personal use (car rentals add up!) when we visit. Do you foresee any issue with the car being registered to the LLC rather than any individual member of the LLC? I have notarized docs indicating we are all limited partners in the LLC. We all have our FM3's

Just want to make sure we don't run into any surprises if we get pulled over by the local authorities with the vehicle being registered to the LLC.

Any feedback would be appreciated!

Osprey - 8-10-2010 at 04:34 PM

Very different animal insuring a person and a LLC. That's where the problems might begin. Call your insuror in the states, then call one who insures cars in Baja. Make sure they both know what you're trying to accomplish -- that is they both recognize how any primary coverage is placed, who is authorized to drive the vehicle in Mexico to comply with policy conditions and covenants.

bajalou - 8-10-2010 at 05:39 PM

Register it to all three of your names. And if it's forever in Mex. you don't need US insurance, just good Mex coverage.

Osprey - 8-10-2010 at 06:26 PM

No joy. The U.S. insurer wants to know the relationship of the qualified applicants and probably would have a very good reason to charge a premium for liability, uninsured motorists and underinsured motorist for each Household where the owners/drivers reside. Think it through folks.

bajalou - 8-10-2010 at 06:38 PM

Osprey

I'm at a loss as to why you want US insurance on a vehicle that stays in Mexico all the time. US insurance offers no coverage in Mexico. If you tell a US insurance company that the vehicle is in Mexico they have always tole me that they won't cover it.

Osprey - 8-11-2010 at 07:20 AM

Sounded like the poster wanted full coverage in the U.S. to Mexico, then maybe just liability down here. Who knows what Mexican insurers want, who qualifies, is there a distinction between the owner and the driver vis a vis negligence? You ask 10 agents down here, your will get 11 different answers.

[Edited on 8-11-2010 by Osprey]

bajaguy - 8-11-2010 at 07:27 AM

Check with Geoff of Bajabound insurance. A sponsor of this board. You can click onb the Bajabound banner at the top of this page.

Pescador - 8-11-2010 at 07:39 AM

If you are leaving the vehicle in Cabo, as you stated, then travel insurance like Lewis and Lewis or Bajabound, may not cover you well for a vehicle that is not actually being used in the US. But, as was stated, they plan on getting plates from South Dakota which adds another twist to the whole thing. I think Osprey's suggestions are spot on if you want to avoid having a problem come claims time.

wilderone - 8-11-2010 at 08:27 AM

joint and several liability with an LLC; if something happens to one, it happens to all three.

Osprey - 8-11-2010 at 08:51 AM

Think "Partners"

Riom - 8-11-2010 at 08:54 AM

Quote:
Originally posted by BajaMagic
Do you foresee any issue with the car being registered to the LLC rather than any individual member of the LLC?


Apart from the insurance which others have mentioned, there's also the problem of it being a "company car". I was looking at something similar for a US car in the US (where I'm not a citizen/resident), and decided that explaining yes it's a company car but no I don't work there despite driving a business-owned vehicle was going to be too complicated.

I know there are the Montana LLC's widely used to own upmarket RV's but anything out of the ordinary causes problems at the border or when pulled over, even more so in another country and language.

Having SD plates should currently work, but you need to plan for the day when every SD county requires an SD resident owner (it's already the case for many but not all counties). Assuming your LLC is not from SD, that could get tricky. You may need to eventually register in the same state as the LLC instead (Nevada? Wyoming?).

Mixing an asset (and possible liability!) like a car into a property holding LLC could result in a claim against the LLC assets (so your real estate) in the event of a problem.

Rob

Osprey - 8-11-2010 at 09:24 AM

LIABILITY INSURANCE FOR CARS IS NOT REQUIRED IN BAJA CALIFORNIA? Wow! alert the press. I thought it was. Wow, I'm calling my agent right now and cancelling mine. Thanks Fishguy, you just saved me a lot of cash. Can I have your cell # in case I have any trouble in an accident? Sure would be great to have some reliable backup then.

The Sculpin - 8-11-2010 at 09:47 AM

Your question is far more complex than you state. You say you have a Nevada LLC - that's fine for US purposes, but how does MX recognize it? As a corporation? Is it paying tax in MX and then passing the foreign tax credit to the US LLC and then the members? Your LLC has a dual identity and I believe can register the car under the MX identity. For all intents and purposes, it is a mexican car.

Also, LLC's don't have partners - they have members - very different. As for joint and several liability with an LLC, that's not accurate. LLC's have characteristics of both corporations and partnerships. Like a corporation, the LLC is definitely a shield against creditors, so the debts of the LLC do not carry to its members unless the members decide to personally guarantee them. Like a partnrship, those same debts do pass to the members to establish the overall capital account basis each member has in the LLC for purposes of allocating the income or loss.

Fishabductor is right - insurance is not required in MX. It's foolish not to have it, but unlike the US it is not a requirement for owning a vehicle or having a license.

That said, I have no idea what the answer is, but I would think the car should be mexican.

Osprey - 8-11-2010 at 09:48 AM

You're making me feel better and better. You should know all about that stuff, being part of a Mexican family an all. I'd still sleep a lot better if I could have your number. You know how those Mexican police can be.

bajajudy - 8-11-2010 at 09:59 AM

If you are in a wreck in BCS and you dont have proof of insurance, they take you car, no matter who is at fault until all damages are paid, all hospitals bills, etc. This can take months.

Osprey - 8-11-2010 at 11:17 AM

The Sculpin knows full well the dangers of being "half right".

The Top Down Creditor
A top down creditor is potentially more serious for an LLC member because the creditor is not coming from the bottom up through the LLC to get to assets of a member. Instead, the top down creditor first sues and gets a judgment against the member because of the member's acts or omissions, rather than the acts or omissions of the LLC, its managers or employees. For example, a member of an LLC who runs a red light and kills or injures somebody is liable for the harm he or she caused. If the victim or the family of the victim sues the member and gets a judgment against the member for the damages caused by the member running the red light, the LLC does not provide any protection for the member against the creditor.

An LLC or other entity never protects you from harm that you cause. When you cause the harm, you have a top down creditor problem.

missadventuring - 6-9-2016 at 02:11 PM

Just getting into this quagmire myself. We have several vehicles, a few of which will stay in Baja. In order to plate the vehicles we need to register and plate them somewhere that doesn't require we bring them back for smog, etc. such as Nevada, South Dakota, Montana. We decided on a Montana LLC for various reasons. But the snafu is that when your vehicles are owned by an LLC (no matter where) you can no longer be insured by AAA or etc., you need commercial insurance in the US. You can't get Mexican insurance (which we have with Discover Baja) without the US insurance. Trying to find good commercial insurance now. Progressive, Geico, Farmers, Great Eastern, Nationwide - any recommendations for commercial vehicle insurance carriers?
Quote: Originally posted by BajaMagic  
Quick Recap - Myself and 2 buddies have a Nevada LLC in which we created for our rental property in Cabo. We just purchased a US vehicle (plan to register in SD), in which we plan to leave in Cabo year around for our personal use (car rentals add up!) when we visit. Do you foresee any issue with the car being registered to the LLC rather than any individual member of the LLC? I have notarized docs indicating we are all limited partners in the LLC. We all have our FM3's

Just want to make sure we don't run into any surprises if we get pulled over by the local authorities with the vehicle being registered to the LLC.

Any feedback would be appreciated!

Nevada???

bajaguy - 6-9-2016 at 02:27 PM

Nevada requires you to maintain insurance coverage by an approved carrier or they will suspend/revoke the plates/registration.....and yes, some areas around Reno and Las Vegas require SMOG

[Edited on 6-9-2016 by bajaguy]