Your LLC’s Gate Code Could Cost You Everything

In Ene v. Graham (Nevada 2024), a court pierced the veil of a single-member LLC that owned rental property. The sole member had a personal gate code, used the property without paying the LLC, held insurance in his personal name, and personally guaranteed the mortgage. He was held personally liable for a plaintiff’s injuries.

He had the gate code.

That detail sounds trivial. It isn’t. When the Nevada Supreme Court walked through the facts of Ene v. Graham in 2024, the personal gate code was one of the first items on the list. So was the insurance — held in the sole member’s personal name, not the LLC’s. So was the personal guarantee on the mortgage. So was the personal use of the property without paying the LLC rent.

None of these things, on their own, sound like the basis for a personal liability ruling. Each one is the kind of detail a single-member LLC owner might dismiss as a paperwork technicality. Combined, they were the basis for the most consequential single-member LLC veil-piercing decision in recent Nevada history.

The Property, the Member, and the Injury

The structure was the most common single-member LLC arrangement in America: one person, one LLC, one property. The LLC owned real estate. The sole member ran it. There were no formal employees, no corporate apparatus, no governance trail. The LLC existed on paper at the Nevada Secretary of State, but in practice the property was indistinguishable from a personal asset.

A plaintiff was injured on the property. The lawsuit named both the LLC and the sole member personally. The plaintiff’s theory: the LLC was the member’s alter ego, the corporate fiction should be disregarded, and the member should be personally liable for the injuries.

The Nevada Supreme Court agreed.

Each Detail on Its Own Sounds Minor

Take any one of these facts in isolation and an owner could argue it was an oversight, a convenience, or a routine business decision. Take them together and they form a pattern the court could not ignore.

The personal gate code

The member had a personal access code to the property. Not an LLC-issued code. Not a property-management code. His own. To a court, this is small evidence of a large idea: the property was treated as something the member could come and go from at will, on his own terms, with no separation between his role as the owner of the LLC and his role as a user of the property.

Personal use without paying the LLC

The member used the property personally and did not pay the LLC rent for that use. From a tax and governance perspective, this is one of the most damaging facts in any single-member real estate LLC case. If you personally use property owned by your LLC, you should pay the LLC fair market rent under a formal lease, and the LLC should record that rent as income. Without the lease and the rent, the personal use looks like the personal exploitation of an asset that happens to be titled in an LLC’s name.

Insurance in his personal name

Property insurance was issued in the member’s name, not in the LLC’s. From the insurer’s perspective, the named insured is the protected party. When the named insured is the individual rather than the LLC, the policy treats the property as the individual’s asset. The court read this exactly that way. The LLC owned the property on paper, but for insurance purposes, the property was the member’s.

Personal guarantor on the mortgage

The member personally guaranteed the mortgage on the property. Personal guarantees are common in small-LLC financing — lenders frequently require them. But the existence of the guarantee is one more thread the court could pull. If the LLC could not stand behind its own obligations without the member’s personal credit, the LLC’s status as an independent entity is harder to defend.

What Governance Records Would Have Changed This

The fix is not exotic. The records the court was implicitly looking for are the standard set every property-holding LLC should produce. The absence of these records is what made the underlying facts decisive.

A lease agreement between the member and the LLC

If you personally use property owned by your LLC, the LLC should issue you a formal lease. The lease should be at fair market rent. You should pay the rent — on time, by check or transfer, into the LLC’s bank account — and the LLC should record it as income. The lease document does not need to be complicated. It needs to exist, and the rent needs to actually move from your personal account to the LLC’s.

Insurance in the LLC’s name

The named insured on property insurance for LLC-owned real estate should be the LLC, not the individual. If your insurance is currently in your personal name, call your insurer and have it reissued in the LLC’s name. If the lender required the personal-name policy as a condition of the loan, ask about adding the LLC as an additional named insured. The policy structure should match the title structure.

A banking resolution for the mortgage

A banking resolution documents that the LLC formally authorized the mortgage and the bank accounts that service it. It names the authorized signers, identifies the lender, and ties the financing to the LLC’s own governance process. Even when a personal guarantee exists, the banking resolution establishes that the LLC took the loan as an LLC decision, not as a personal one.

An annual written consent

Each year, the sole member should sign a formal annual written consent documenting the LLC’s operations: confirming officers, authorizing banking, ratifying decisions taken during the year, and affirming the LLC continues to operate as a separate business. This is the document that demonstrates the LLC’s independent existence over time. Single-member LLCs need this exactly as much as multi-member LLCs do — arguably more, because the line between owner and entity is thinnest when there is only one owner.

What This Means for Property-Holding LLCs

The single-member LLC that owns one rental property is the most common LLC structure in the United States. It is the structure financial advisors recommend, the structure real-estate-investing podcasts describe, the structure that millions of people set up when they buy their first investment property.

If you own rental property through an LLC, Ene v. Graham is about you. The fact pattern is not an outlier — it is the default. One sole member, one property, one personal mortgage guarantee, one insurance policy that the member set up before the LLC was even formed. The LLC was added to the title at some point. The insurance was never updated. The property remained, in every practical sense, the member’s.

The fix is what most property-holding LLC owners have never done:

• Issue a lease from the LLC to anyone using the property personally, including yourself.
• Update insurance to name the LLC as the insured party.
• Document the mortgage with a banking resolution, even if you personally guaranteed it.
• Create annual written consents documenting the LLC’s property management decisions, expenses, distributions, and ongoing governance.
• Pay yourself a distribution through a formal distribution resolution rather than treating LLC rent income as if it were already personal.

Each of these takes minutes to do. None requires a lawyer. The cumulative effect of doing them is a governance trail that demonstrates the LLC operates as a separate entity — which is exactly what was missing in Ene v. Graham.

What This Means for Every Single-Member LLC

Even if you don’t own property, the principle is identical. Courts look for evidence that you and your LLC are separate. Governance records create that evidence. Without them, you are one lawsuit away from personal liability.

Ene v. Graham is a Nevada case, but the analytical framework is the same in every state. The factors vary; the question does not. Did the LLC operate as a separate entity? The answer is found in the records. For state-specific veil-piercing standards across every U.S. jurisdiction, see our state-by-state veil piercing case law guide. For other case studies showing how the analysis plays out in practice, see our real-cases roundup.

If you are weighing how to produce records that meet the standard Ene establishes, see our comparison of governance options — free templates, registered agent services, and document automation built around defensibility.

The Lesson

Ene v. Graham is the case property-holding LLC owners should read before their next renewal cycle. Not because the facts are unusual — because they are not. The personal gate code, the personal-name insurance, the personal mortgage guarantee, the personal use without rent: these are not red flags only a sophisticated owner would notice. They are the default state of most single-member real-estate LLCs in the country.

The defensible posture is straightforward. Treat the LLC as the entity that owns the property. Pay it rent when you use the property. Insure the property in its name. Document the mortgage as the LLC’s obligation. Create annual records that show the LLC is making its own decisions. None of this requires a lawyer. All of it requires deliberate operation of the LLC as something other than a name on a deed.

For the full Nevada veil-piercing analysis under NRS 86.376 and the Gardner v. Henderson Water Park framework that preceded Ene, see our Nevada veil piercing guide.