A federal court ruling out of New York issued in May 2026 sent a clear message to real estate investors and business owners: the state where you register your LLC is not just a paperwork decision — it can determine whether your personal assets are protected when things go wrong.
The case, Shumener, Odson Oh LLP v. Saadia Square, LLC, 2026 WL 1266002 (S.D.N.Y. May 8, 2026), has reignited a debate that business attorneys have long had with their clients: New York LLC law is, in the words of a prominent Forbes analysis, “a mess” — and if you own real estate or business interests through a New York LLC, you may be far more exposed than you realize.
What Happened in the Saadia Square Case?
Without getting into every procedural nuance, the court’s ruling raised serious questions about the strength of the “charging order” protection that LLC owners in New York rely on. A charging order is supposed to be a creditor’s exclusive remedy against an LLC member’s interest — meaning that even if a creditor wins a judgment against you personally, they cannot seize your LLC membership interest or take over your business. They can only wait for distributions to come to you.
In New York, that protection has always been weaker than in other states. The Saadia Square ruling underscored just how unpredictable New York courts can be when interpreting the LLC statute. A creditor who obtains a judgment against you could potentially reach your LLC interest in ways that a properly structured Wyoming or Delaware LLC would have blocked entirely.
Why Where You Register Your LLC Matters
Every state has its own LLC statute, and those statutes are not created equal. When you form an LLC in a particular state, you are agreeing to be governed by that state’s laws — including its laws on creditor remedies, member liability, and dissolution. Here is how the major options compare:
New York LLCs
New York’s LLC Act (N.Y. Limited Liability Company Law) has historically offered incomplete charging order protection. New York courts have shown a willingness to pierce the protections that LLC members expect, particularly in closely held entities. The Saadia Square decision is the latest example of why relying on New York LLC law for asset protection is a gamble.
New Jersey LLCs
New Jersey’s Revised Uniform Limited Liability Company Act (RULLCA), adopted in 2013, provides stronger and more predictable charging order protections than New York. Under N.J.S.A. 42:2C-43, a charging order is the exclusive remedy for a judgment creditor against a member’s transferable interest. New Jersey courts have generally respected this limitation. For many NJ-based business owners and real estate investors, a New Jersey LLC provides a solid, home-state option with strong statutory protections.
Wyoming LLCs
Wyoming is widely regarded as the gold standard for LLC asset protection in the United States. Wyoming’s LLC statute explicitly makes the charging order the sole and exclusive remedy — and it goes further by prohibiting foreclosure on a membership interest in most circumstances. Wyoming also offers strong privacy protections (no requirement to list members in public filings), low fees, and no state income tax. For real estate investors holding properties across multiple states, a Wyoming LLC as a holding company is a strategy worth serious consideration — and it is one that I have personally used for my own real estate portfolio.
The Practical Takeaway for Real Estate Investors
If you own investment property, you almost certainly need an LLC — but simply having an LLC is not enough. The question is which state’s LLC provides the protections you need. Consider the following:
- Operating in New York? You can hold New York property in a Wyoming LLC that is registered as a foreign LLC in New York. You do business in NY but your entity is governed by Wyoming law.
- Operating in New Jersey? A New Jersey LLC is generally solid, but layering a Wyoming holding LLC on top adds an extra tier of protection.
- Multi-state portfolio? A Wyoming LLC as a parent holding company, with state-specific LLCs as subsidiaries for each property, is a common structure that maximizes protection while maintaining compliance.
You Can Register in Wyoming — Even for New York Property
One of the most common misconceptions I hear from clients is: “My property is in New York, so I have to use a New York LLC.” That is not true. You can form a Wyoming LLC and register it as a foreign entity authorized to do business in New York. The entity’s internal governance — including creditor remedies against your membership interest — is then largely governed by Wyoming law, not New York law.
Our firm can form LLCs in New York, New Jersey, and Wyoming, and we can advise you on the right structure for your specific situation. Whether you are buying your first investment property or restructuring a multi-property portfolio, getting the entity structure right from the start is far cheaper than trying to fix it after a creditor has already obtained a judgment against you.
Don’t Let a Case Like Saadia Square Happen to You
The Saadia Square ruling is a cautionary tale, not just a legal curiosity. Real people and real businesses are affected when courts interpret LLC statutes in unexpected ways. The best protection is a well-structured entity formed in the right state, maintained properly, and reviewed periodically as the law evolves.
If you have questions about your LLC structure, want to form a new LLC, or are concerned about how a court judgment could affect your business interests, contact the Law Office of Orlando R. Rodriguez, LLC today. We offer consultations for business owners and real estate investors throughout New Jersey and New York.