Using a corporation for car ownership?

CFA123

Silver
May 29, 2004
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Any input on pros/cons of using a corporation as a holding company for a vehicle?

It's my understanding that by doing so, financial and legal liability is limited to the assets of the corporation in case of an accident - which would essentially be the car itself.

The corporation (most likely an EIRL) would hold no other assets, conduct no business, nor have a bank account.

In this specific case, a licensed third party - not the owner of the corporation - would be driving the car on a regular basis.
 

Jaime809

Bronze
Aug 23, 2012
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I believe the corporation, if properly registered here in DR, is required to have a bank account.

And the corporate ownership of the car would probably not avoid the driver being held accountable by the local police, at least initially.
 
Jan 9, 2004
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Any input on pros/cons of using a corporation as a holding company for a vehicle?

It's my understanding that by doing so, financial and legal liability is limited to the assets of the corporation in case of an accident - which would essentially be the car itself.

The corporation (most likely an EIRL) would hold no other assets, conduct no business, nor have a bank account.

In this specific case, a licensed third party - not the owner of the corporation - would be driving the car on a regular basis.

Cons:

Annual corporate tax return and corporation maintenance taxes.

Why go through the hassle....just take the money you would have spent to form the corp, file the annual tax return, annual maintenance.....and insure it to the hilt.

Corporation for real estate/business...yes.....for a car....no.

Respectfully,
Playacaribe2
 

CFA123

Silver
May 29, 2004
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Cons:

Annual corporate tax return and corporation maintenance taxes.

Why go through the hassle....just take the money you would have spent to form the corp, file the annual tax return, annual maintenance.....and insure it to the hilt.

Corporation for real estate/business...yes.....for a car....no.

Respectfully,
Playacaribe2

The car is currently owned in just this manner within a corporation. There's an option to either buy the corporation or the corporation could sell me the car and I register it in my name. Since a third party would be driving it most of the time, I thought there might be benefit.

I do have my real estate held within a corporation.
 

william webster

Platinum
Jan 16, 2009
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The real estate carries the inheritance issue.... cars, not so much.

Insurance is your protection for cars... just 'ante up'....

easy for me to say

and, if the car and the property are in the same corporation...... double trouble
 
Jan 9, 2004
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The car is currently owned in just this manner within a corporation. There's an option to either buy the corporation or the corporation could sell me the car and I register it in my name. Since a third party would be driving it most of the time, I thought there might be benefit.

I do have my real estate held within a corporation.

Well, if you take/buy the corporation, do make sure any/all maintenance/taxes have been paid......and be sure to inquire about those annual costs.

There is a benefit....its just.....at what cost/hassle.

Personally, if my other assets (real estate ) were in a different corporation...and they are....I would not worry about the car....and I don't.....and I also have a third party driver....just be sure to have them as a named insured/driver on the policy....and I do.


Respectfully,
Playacaribe2
 
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MikeFisher

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Feb 28, 2006
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in case of a accident, i don't think you would have any advantage at all.
if i have a accident with someone else, who is at fault, i would NOT sue the carholder, i would sue the driver to get taken responsible for the produced damages, and the car insurance of course.
the holder?, nope.

Mike
 

CFA123

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May 29, 2004
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in case of a accident, i don't think you would have any advantage at all.
if i have a accident with someone else, who is at fault, i would NOT sue the carholder, i would sue the driver to get taken responsible for the produced damages, and the car insurance of course.
the holder?, nope.

Mike

I understand what you're saying... but most people sue where there's money or the perception of money... regardless of whether that person is really at fault.

What's likely to happen in this scenario:

Someone driving your car has an accident and destroys other car, injures 4, and there's some property damage.
Injured parties want money for injuries/damage which exceeds insurance limit.
Driver of your car makes 20,000 pesos a month.

Injured parties see car is registered to Mike who owns a charter business and multiple boats... and takes you to court.
Do you want to be at the mercy of the judge's decision?

Maybe this can't happen... but if it can, finding a way to protect assets seems reasonable. That's why I'm asking the question and appreciating all the responses so far. If a corporation truly shelters outside assets... it could be a valuable tool.
 

MikeFisher

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I understand what you're saying... but most people sue where there's money or the perception of money... regardless of whether that person is really at fault.

What's likely to happen in this scenario:

Someone driving your car has an accident and destroys other car, injures 4, and there's some property damage.
Injured parties want money for injuries/damage which exceeds insurance limit.
Driver of your car makes 20,000 pesos a month.

Injured parties see car is registered to Mike who owns a charter business and multiple boats... and takes you to court.
Do you want to be at the mercy of the judge's decision?

Maybe this can't happen... but if it can, finding a way to protect assets seems reasonable. That's why I'm asking the question and appreciating all the responses so far. If a corporation truly shelters outside assets... it could be a valuable tool.

i understand what your are saying,
but i don't see a chance in the DR to sue the carholder, as long as he was not driving the car.
with the exception, in case i would leave my carkeys to a driver who is a minor or drunk at the moment i give him/her the keys or to someone without a valid drivers license.
i get your point, makes sense.

Mike
 

Cdn_Gringo

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Apr 29, 2014
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Most of the time a lawyer will name as many parties as they can think of in the initial filing for a lawsuit. Over time the list of those who share responsibility will be whittled down but it still takes a lawyer, time and money to extricate yourself from the initial filing.

For example:

Car is owned by and registered to Gringro LLC.
Car is provided to and driven by someone not affiliated with Gringo LLC.

If Gringo LLC has a contract with the driver, stating that the driver is responsible for all maintenance, repairs infractions and accidents that may help.

Driver has an accident. Driver is not related to the owner of Gringo LLC. Driver willingly accepts full responsibility and culpability, Gringo LLC should be able to wiggle out from under the lawsuit by getting a lawyer, presenting the contract and saying "no es mi culpa".

If there is no contract or if the driver is related to the owner of the company, or claims that the brakes were faulty, then Gringo LLC is in it for the long haul.

Creating a company to hold just a car for the purposes of limiting liability speaks to a logic flaw.

If you are providing a vehicle to someone who you think may be involved in an accident and the repercussions of that may come back and bite you, then don't provide a vehicle to that person. If the vehicle is for a family member, insure it to the hilt, make sure the driver is legitimately licensed, in the country legally and hope for the best.

Any decent lawyer will stand up on the first day in court and point out that Gringo LLC is not a real company. It has no bank account, no assets, performs no function or service other than hold a single vehicle and the Judge will roll their eyes and with the wave of a hand declare Gringo LLC not a legitimate company under whatever law applies as it conducts no business transactions of any kind.

A holding company registered in a foreign country other than the DR may be more advantageous but is more work, money and hassle. A Dominican registered holding company will probably not produce the intended benefits.

Just my opinion, I do not play a lawyer on TV.
 

william webster

Platinum
Jan 16, 2009
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I think the Gringo's point is that if you are using the company as a ruse to avoid legal problems and it can be proven that company has no other function but that ruse ........... you might have trouble carrying out the ruse.

How's that for a precis !
 

MikeFisher

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I'll give you an example: One of my coworkers (Dominican) lives in a nice house, has a couple of new Jeepetas, and owns 5 20' transport trucks.

A couple of years ago, a kid doing wheelies on a motorcycle blasted through a red light at an intersection and T-boned one of her trucks.

Once the kid's family found out she had money they went for everything.

She anticipated it would happen based on comments the family made at the accident site, so she immediately started moving everything out of her name.

By the time their lawyer started digging, the only thing left in her name was the truck the kid hit.

The family was awarded the truck. It doesn't just happen to gringos.
Of course it is not a gringo thingy,
It happens to dominicans on daily bases.
But in such mentioned case the driver been a paid employee,paid by the truck owner to ride that vehicle,
Here the owner/company is always the one they go after.
I have none of my boats owned by my company, as an example.
But to open a corporation for a privately used car?

Enviado desde mi SM-G800M mediante Tapatalk
 

ohmmmm

Bronze
Jun 11, 2010
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i understand what your are saying,
but i don't see a chance in the DR to sue the carholder, as long as he was not driving the car.
with the exception, in case i would leave my carkeys to a driver who is a minor or drunk at the moment i give him/her the keys or to someone without a valid drivers license.
i get your point, makes sense.

Mike

The person that owns the car or vehicle in the accident always gets sued. That is why the insurance is for the vehicle and not the driver. Not saying that the driver can't get sued, but the owner is usually responsible as well.

If your going to put the car into a company name, have two companies. One company that owns the vast majority of the assets...like land/building and such. The other corporation is an operating company that will run your business. You can put the car into the name of the operating company. If you have multiple cars and such, its better to sell all the assets of the operating company such as other vehicles to another company, friend or whatever right after a serious accident where there was a serious injury or death. Then there will be little or no assets in the corporation for which to sue for big bucks. The best option, however is what JD Jones said which is to have lots of liability insurance. imho...
 

MikeFisher

The Fisherman/Weather Mod
Feb 28, 2006
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The person that owns the car or vehicle in the accident always gets sued. That is why the insurance is for the vehicle and not the driver. Not saying that the driver can't get sued, but the owner is usually responsible as well.

If your going to put the car into a company name, have two companies. One company that owns the vast majority of the assets...like land/building and such. The other corporation is an operating company that will run your business. You can put the car into the name of the operating company. If you have multiple cars and such, its better to sell all the assets of the operating company such as other vehicles to another company, friend or whatever right after a serious accident where there was a serious injury or death. Then there will be little or no assets in the corporation for which to sue for big bucks. The best option, however is what JD Jones said which is to have lots of liability insurance. imho...

do you own a company in the DR?
do you own properties and have big assetts here in DR?

do you own a Car in DR or own a car at all?

Mike
 

Fabio J. Guzman

DR1 Expert
Jan 1, 2002
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I understand what you're saying... but most people sue where there's money or the perception of money... regardless of whether that person is really at fault.

What's likely to happen in this scenario:

Someone driving your car has an accident and destroys other car, injures 4, and there's some property damage.
Injured parties want money for injuries/damage which exceeds insurance limit.
Driver of your car makes 20,000 pesos a month.

Injured parties see car is registered to Mike who owns a charter business and multiple boats... and takes you to court.
Do you want to be at the mercy of the judge's decision?

Maybe this can't happen... but if it can, finding a way to protect assets seems reasonable. That's why I'm asking the question and appreciating all the responses so far. If a corporation truly shelters outside assets... it could be a valuable tool.

This happens all the time. The owner of the car is jointly and severally liable with the driver who caused the accident. The victim or the victim's family sue the driver and the owner of the car as a matter of course.
 

CFA123

Silver
May 29, 2004
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This happens all the time. The owner of the car is jointly and severally liable with the driver who caused the accident. The victim or the victim's family sue the driver and the owner of the car as a matter of course.

Thanks, Sr Guzman, for the confirmation of this.

What level of protection, if any, would an EIRL that owns the car, and only the car, provide to the owner and his/her personal assets?

The specific situation - a private individual owns an EIRL that owns the car and no other assets. The car is used by a friend or friends to run errands regularly, at times driving cross country, to the airport etc.

Should one of these legally licensed drivers have an accident, would the owner of the EIRL have any personal liability? Is there anything at risk more than the assets within the EIRL, namely the car which was in the accident.