Log in or register
Share on LinkedInShare on LinkedIn

ARTICLE · 04 MAY 2016

West Coast Real Estate Update: May 3, 2016

Holland & Knight
Explore more from Holland & Knight

Before providing a non-recourse loan to a Limited Liability Company (LLC) – i.e., one for which the LLC members do not bear the risk of economic loss – a lender often will require the LLC's managing member to provide a "bad boy" guaranty.

United StatesReal Estate and Construction
Susan Booth
Susan Booth
Stacie Goeddel
Stacie Goeddel
Robert Haight Jr.
Robert Haight Jr.
Karl Lott
Karl Lott
Douglas Praw
Douglas Praw
Author LinkedIn connections

Susan Booth, Karl Lott and Douglas Praw are Partners in Holland & Knight's Los Angeles office
Ashley Jason and Paul Park are Associates in Holland & Knight's Los Angeles office
Stacie Goeddel, Robert Haight Jr. are Partners in Holland & Knight's San Francisco office

IRS Reevaluates "Bad Boy" Carve-Outs

Before providing a non-recourse loan to a Limited Liability Company (LLC) – i.e., one for which the LLC members do not bear the risk of economic loss – a lender often will require the LLC's managing member to provide a "bad boy" guaranty promising to pay the debt upon the occurrence of certain events, such as a bankruptcy. Prior to February 2016, loans containing bad boy carve-outs were customarily treated as nonrecourse obligations for purposes of calculating the guaranteeing member's liabilities and determining its tax basis under Internal Revenue Code sections 752 and 465, respectively. Such treatment was based on certain exceptions contained in Treasury

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

View source

Related Articles

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

See more popular content from

Article

Governor Newsom Signs Key Housing Bills Into Law

California Governor Gavin Newsom has signed multiple state housing bills into law that will take effect January 1, 2027, introducing significant changes to housing development regulations across the state. These new laws establish streamlined ministerial approval processes for various housing types, from high-density transit hub projects in major cities to townhomes and factory-built housing, while also reforming ADU regulations, permit processing requirements, and density bonus provisions. Will these legis
United StatesReal Estate and Construction
Allen Matkins Leck Gamble Mallory & Natsis LLP
Allen Matkins Leck Gamble Mallory & Natsis LLP
Article

More For The Missing-Middle: SB 1116 Expands Starter Home Revitalization Act (SB 684/1123)

California's Starter Home Revitalization Act receives significant enhancements through Senate Bill 1116, expanding site eligibility criteria, limiting local zoning restrictions, and invalidating certain private deed covenants to accelerate small-lot residential subdivisions. The legislation introduces streamlined 60-day ministerial approvals while establishing new rules for lot size averaging, height restrictions, and concurrent permit processing that fundamentally reshape the pathway for starter home devel
United StatesReal Estate and Construction
Allen Matkins Leck Gamble Mallory & Natsis LLP
Allen Matkins Leck Gamble Mallory & Natsis LLP
Article

California Contractors Get A Much-Needed Break: SB 342 Softens The Harsh Consequences Of Contractor License Lapses

Imagine completing a multimillion-dollar project, performing quality work, paying your subcontractors, and satisfying the owner, only to discover that a temporary contractor license lapse could prevent you from recovering payment for that work or pursuing claims for extra work. For decades, that was the reality under California Business and Professions Code section 7031.
United StatesReal Estate and Construction
Seyfarth Shaw LLP
Seyfarth Shaw LLP
Article

Residential Vacancy Tax Preempted By State Law

A California Court of Appeal has invalidated San Francisco's Empty Homes Tax, ruling that the Ellis Act—which protects property owners' right to exit the rental market—also shields them from being forced to enter it through vacancy taxation. This landmark decision raises critical questions about the viability of similar residential vacancy taxes that other California municipalities have enacted or are considering as housing policy tools.
United StatesReal Estate and Construction
Cox, Castle & Nicholson
Cox, Castle & Nicholson
Article

New York City Rent Freeze Faces Legal Challenge As Court Considers Landlords’ Claims

Landlords of rent stabilized buildings in New York City have filed a lawsuit challenging the rent freeze passed by the Rent Guidelines Board, questioning the Board's independence and data integrity. With operating costs rising 31% over five years while the Board voted 7-1 for a freeze affecting 1 million apartments, the case raises critical questions about the balance between tenant protection and landlord viability.
United StatesReal Estate and Construction
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
Article

New Florida Law Adds Licensing Risk To Contractor/Subcontractor Payment Disputes

Florida's new Section 489.1295 establishes licensing consequences for contractors who fail to timely pay subcontractors and suppliers, effective July 1, 2026. The statute creates disciplinary exposure for knowingly or willfully withholding payment, though it includes important exceptions for bona fide disputes and contractual payment terms. Contractors must now navigate potential license sanctions including fines up to $10,000, suspension, or revocation when payment disputes arise.
United StatesReal Estate and Construction
Peckar & Abramson, P.C.
Peckar & Abramson, P.C.