Legal Mistakes Every Investor Must Avoid

Protect Your Investments Before It’s Too Late: Legal Mistakes Every Investor Must Avoid

Lessons from Kayla Shively

In this episode of Branching Out: Where Real Estate Meets Real Life, Christina sits down with Kayla Shively, founder of Churchill Shively PLC, to unpack what real estate investors need to know about protecting their investments.

🎥 Watch the full video on YouTube below or listen to the podcast here

From Law School to Building a Firm with Purpose

Kayla’s path into law started early, shaped by a personal injury experience as a child and the attorney who helped her family through it. Initially drawn to personal injury law, she quickly realized during law school that it wasn’t the right fit.

After exploring opportunities in compliance and working within both boutique and large law firms, she found her niche in commercial real estate law — but more importantly, she discovered what mattered most to her: relationships.

“I love driving through Charlotte and seeing a development or a project that I worked on… and just the interpersonal relationship with local business owners.”

That desire to serve clients more personally — combined with her faith — ultimately led her to start her own firm.

“I really wanted to found a firm that was based on biblical principles… it becomes more about dollars than people.”

Today, her practice is built around accessibility, relationships, and helping clients navigate complex legal decisions with clarity and confidence.

The Legal Mistake That Puts Everything at Risk

When asked about the biggest mistake she sees investors make, Kayla doesn’t hesitate.

Failing to properly structure their investments within a legal entity.

Without that structure, everything you own can be exposed — not just the property itself, but your personal assets as well.

“Without that, you are really exposing your investment… to personal liability.”

That includes:

• Your personal home
• Vehicles
• Investments like stocks and bonds
• Other business interests

The solution is straightforward: every investment property should be held in a legal entity, most commonly an LLC.

And while some investors delay this step because of cost, the reality is that the investment is minimal compared to the protection it provides.

Structuring Your Entities the Right Way

Once investors understand the importance of having an entity, the next question becomes how to structure it.

Should you have one LLC or multiple?

Kayla explains that while either approach can work, separating properties into different entities provides a higher level of protection.

“If you have all of your assets in one bucket… that lawsuit can attach to any of your other assets.”

By placing properties into separate entities — sometimes under a holding company — investors can isolate risk and protect their stronger assets from potential issues elsewhere in the portfolio.

It’s a strategy that becomes increasingly important as you scale.

Why “Winging It” Is a Risky Strategy

Another common pattern Kayla sees is investors jumping into deals — especially with friends or partners — without formal agreements in place.

It often starts with good intentions:

• One person brings capital
• Another brings time and effort
• Everything feels aligned

But without documentation, there’s no clear structure defining ownership, responsibilities, or exit strategies.

“You stand to lose a lot more when there’s nothing written down.”

Even more concerning is when investors go through the effort of having documents drafted — but never actually sign them.

“And it’s really of no value to you if it’s not signed.”

In those cases, the agreement can’t be enforced, leaving investors exposed and relying on default state laws that may not reflect their intentions.

The Role of Operating Agreements

An operating agreement is one of the most important documents for any real estate investor using an LLC.

It outlines:

• Ownership percentages
• Decision-making authority
• Buyout provisions
• Exit strategies
• 
  

Without it, your business defaults to state statutes, which are often broad, complex, and not tailored to your situation.

“Those documents can be tailored specifically to what you want your entity to do and how you want it to function.”

This is where intentional planning makes a significant difference — especially as your portfolio grows.

Partnerships: Structure Matters More Than Intentions

Partnerships can be powerful — but they can also be one of the fastest ways for deals to unravel if they’re not structured correctly.

Kayla offers a clear perspective based on what she’s seen: “I have almost always never seen a partnership work out.”

For investors who do choose to partner, structure becomes critical.

Key considerations include:

• Avoiding 50/50 ownership splits
• Establishing a clear decision-maker
• Defining buyout provisions
• Planning for exit scenarios in advance

Without these in place, disagreements can quickly escalate — and without a clear framework, the only option may be dissolving the business entirely.

Commercial Leases: Understanding What You’re Signing

Commercial real estate introduces a different level of complexity compared to residential investing.

Unlike residential leases, which are more regulated, commercial agreements are largely driven by negotiation.

“It’s kind of like the wild, wild west… whatever you contract for.”

This makes it even more important to understand what’s in your lease before signing.

Some of the most common issues Kayla sees include:

• Missing memorandum of lease provisions, which can leave tenants vulnerable if ownership changes
• Unclear or overly burdensome HVAC responsibilities
• Lack of audit rights for expenses like common area maintenance
• Personal guarantees that allow landlords to pursue personal assets

Each of these can significantly impact the financial and legal outcome of a deal if not properly addressed upfront.

When Small Oversights Become Big Problems

One of the most powerful parts of this conversation is hearing how small oversights can quickly turn into major issues.

Kayla shares a story of a client preparing to build a wedding venue on a large piece of land — only to discover that previous owners had retained hunting rights on the property.

“We’ve seen guys walking around our property with guns.”

The situation nearly derailed the entire project:

• Financing was at risk
• Title insurance wouldn’t cover it
• The deal required legal intervention and additional costs to resolve

It’s a clear reminder of the importance of thorough due diligence — especially when it comes to title work.

Faith, Stewardship, and Business

Faith plays a central role in how Kayla approaches both her business and her clients.

From founding her firm on biblical principles to actively giving back through faith-based organizations, her perspective aligns closely with the concept of stewardship that Branch emphasizes.

“My faith has really helped me persevere… I’m here for a reason.”

It’s not just about building a business — it’s about building something with purpose, integrity, and long-term impact.

Practical Takeaways for Investors

This episode reinforces a simple but powerful idea: real estate investing is a business, and it should be treated like one from the very beginning.

That means:

• Setting up your legal structure early
• Working with an attorney before problems arise
• Documenting every agreement clearly
• Making sure documents are fully executed
• Building a trusted team around you
• 
  

These steps don’t just protect your investments — they position you to grow with confidence.

5-Minute Fast Fire

Q: What’s your favorite book of all time?

•  “The Bible… Ecclesiastes or Proverbs. And Braving the Wilderness by Brené Brown.”

Q: If you weren’t an attorney, what would you be?

•  “A boutique owner. I absolutely love clothes… I love fashion.”

Q: What’s your biggest pet peeve in contracts?

•  “When people just don’t sign it.”

Q: What’s one legal concept investors should know?

•  “Tax deferral programs like 1031 exchanges… and having an operating agreement so you can get financing.”

Q: What’s one of the most interesting clauses you’ve added to a contract?

•  “A provision where the landlord gets a free beer per day from a brewery tenant.”

Final Thoughts

The takeaway from this conversation is clear: the deals you’re working so hard to build are only as strong as the foundation beneath them.

Legal structure isn’t something to figure out later — it’s something to put in place from the start.

Because when you approach real estate with intention, the right team, and the right structure, you’re not just investing.

You’re building something that lasts.

What Next?

This is the shift many investors are waiting for — not more information, but structure and accountability around their next step.

That’s why we created the Branch Framework — not as another course, but as a mentor-led system designed to help you move from learning to doing.

Inside the system, you’ll get:

✔ A clear roadmap to define your numbers and your buy box

✔ Real deal reviews and practical guidance

✔ Tools that remove emotion from your decisions

✔ Accountability that turns intention into movement

✔ A community of investors who are actually moving

This isn’t about chasing trends. It’s about stewardship — using the tools in front of you and taking the next faithful, informed step.

👉 Learn more about the Branch Framework and step into your guided path forward.

Your first door — or your next one — may be closer than you think. 🌿

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