The Colorado Supreme Court recently ruled that owners and managers of limited liability companies (LLC) now have less exposure to personal liability and no fiduciary duty toward creditors should the company become insolvent.
Limited liability companies are primarily governed by each state's LLC Act and LLC operating agreement. It is in this way that courts across the nation are being asked to determine a standard for LLC accountability. This landmark ruling makes Colorado very attractive to potential owners and managers forming new LLCs and serves as a precedent for other states.
The rental industry in Colorado could stand to benefit greatly because of this appealing reduction to personal liability. Existing property owners operating under LLC can now take a deep breath and new property owners will be drawn to the state for its lower risk investment potential.