Alternatives to LLCs for Liability Protection in Florida Rental Properties

For years, forming an LLC was the default advice for owning investment property. That advice is no longer as simple as it once was. In Florida, reassessment of property values, higher insurance costs, and increased administrative burdens have made LLC ownership less attractive for many small and mid-size real estate investors.

The good news is this: an LLC is not the only way to manage liability risk. In many cases, traditional tools—used correctly—can provide meaningful protection without triggering reassessment or unnecessary expense.

Why LLCs Are Losing Their Appeal for Rental Property Owners

An LLC can still make sense in the right circumstances, but investors are increasingly running into problems:

• Property tax reassessment risk when property is transferred into or out of an LLC
• Higher insurance premiums for LLC-owned residential property
• Financing issues, including loss of homestead-style protections and less favorable loan terms
• Ongoing costs and compliance, even for a single rental property

For owners of one or two properties, these drawbacks often outweigh the perceived liability benefits.

Alternative #1: Proper Insurance (The First Line of Defense)

Insurance has always been the foundation of liability protection, and it remains the most practical solution for most landlords.

Landlord Insurance

A standard homeowner’s policy is not enough for rental property. A landlord policy typically includes:

• Property coverage
• Liability coverage
• Loss of rental income

Umbrella Liability Policies

An umbrella policy sits on top of your landlord insurance and provides additional coverage—often in $1 million increments—at a relatively modest cost.

Reality check: Many claims never reach personal assets because adequate insurance resolves them long before litigation becomes existential.

Alternative #2: Title Ownership Strategies (Old School, Still Effective)

Sometimes the way property is titled can meaningfully reduce exposure.

Tenancy by the Entirety (Married Couples)

For married couples, holding rental property as tenants by the entirety can protect the property from the creditors of just one spouse.

This protection:

• Exists under Florida law
• Does not require an LLC
• Does not trigger reassessment on its own

It’s not perfect protection, but it’s real protection.

Alternative #3: Revocable Trusts (Limited Liability, Major Control Benefits)

A revocable trust does not provide full liability protection like an LLC—but that’s not the point.

Trust ownership can:

• Avoid probate
• Preserve continuity of management at death or incapacity
• Keep ownership private
• Avoid reassessment that might occur with LLC transfers

When paired with strong insurance, trusts are often a cleaner, more flexible option for long-term ownership and succession planning.

Alternative #4: Segregation Without an LLC

For investors with multiple properties, risk can sometimes be managed by segregation, not entity formation.

Examples include:

• Higher insurance limits on higher-risk properties
• Separate policies for different properties
• Conservative lease drafting and strict maintenance protocols

This approach avoids the domino effect where one poorly structured LLC exposes everything tied to it.

Alternative #5: When an LLC Still Makes Sense

This article is not anti-LLC. It’s anti-automatic-LLC.

An LLC may still be appropriate when:

• The property is commercial or multi-unit
• There are multiple unrelated owners
• The property is already reassessed and insured accordingly
• Significant operational risk exists

The key is intentional use—not reflexive use.

The Bigger Picture: Liability Protection Is a System, Not a Document

Too many investors believe one document solves every problem. That mindset causes more harm than good.

True liability protection comes from:

• Adequate insurance
• Thoughtful titling
• Good maintenance and management practices
• Proper estate planning integration

When these pieces work together, the need for an LLC often becomes far less compelling.

Conclusion

LLCs are no longer the default solution for Florida investment property ownership—and for many landlords, they never should have been. With reassessment risks and rising costs, it’s time to return to fundamentals.

If you own rental property in Florida and are questioning whether your current structure still makes sense, it’s worth reviewing your options before making a costly move. If you have questions about liability protection, titling, or integrating rental property into an estate plan, contact Bart Scovill, PLC to discuss a strategy that fits your situation.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship. This office does not provide tax advice.