A lot of filmmakers breathe a sigh of relief once the loan-out company signs the agreement.
“Great. I’m covered. They’re a professional. They run everything through their LLC. This is clean.”

Except… it isn’t.
Not automatically.

Loan-out companies create one of filmmaking’s most dangerous legal misunderstandings: the belief that a contract with the LLC is the same thing as securing the individual’s creative rights.

It’s not.
And that misunderstanding has killed more festival premieres and distribution deals than most filmmakers ever hear about.

You Got the Loan-Out Company to Sign. You’re Safe, Right?

Not so fast.

Imagine hiring a cinematographer, editor, or composer who operates through an LLC or S-Corp. You sign the deal with the company, you pay the invoices, and the work gets delivered.

But here’s the trap:

The company isn’t the person who actually created the work.
Copyright attaches to the individual creator unless the individual signs something that properly transfers ownership.

Meaning:

• you may not own the edit
• you may not own the footage
• you may not own the music
• you may not be able to prove chain of title
• and a distributor, insurer, or streamer could reject your delivery package

And yes — this can happen even when you paid in full.

👉 This pairs with the copyright basics covered in
Do You Own What You Paid For? The Copyright Trap for Filmmakers →

What Is a Loan-Out Company?

A loan-out company is a personal business entity — usually an LLC or S-Corp — created by freelancers, artists, and entertainment professionals to:

• reduce personal liability
• pass income through a corporation
• take deductions for gear, travel, software, and expenses
• get paid “as a company” rather than as an individual

The loan-out then “loans” the creative’s services to your production.

This structure is perfectly legitimate and incredibly common.
But it creates one serious ownership problem filmmakers rarely know about.

The Legal Loophole: Ownership Isn’t Guaranteed

Copyright law attaches to the human being who actually creates the work.
Not their company.
Not their corporation.
Not their brand name.

So when you sign only with the loan-out, you skip the one person who matters most for copyright: the creator themselves.

This leaves a major gap:

• No valid work-for-hire acknowledgment
• No copyright transfer from the person
• No guarantee of ownership
• No enforceable chain of title
• No delivery-ready paperwork for festivals, E&O, or platforms

Netflix, Amazon, Hulu, Apple, and major festivals increasingly flag projects that rely solely on loan-out signatures — because they know the law better than many filmmakers do.

🔗 For what festivals and distributors actually check, see:
Work-for-Hire Agreement for Film: The Complete Indie Guide →

This Issue Is Getting More Visible

In 2024, the Los Angeles Times reported that California tax and labor authorities have begun tightening oversight of loan-out corporations. That scrutiny is bleeding into entertainment transactions, where productions must now show:

• who created the work,
• who owns the work, and
• whether rights were properly transferred.

If ownership isn’t perfectly clear, your film’s paperwork falls apart.

The Solution: Use an Inducement Letter or Dual-Signature Clause

To close the loophole, you must get the individual creator to personally acknowledge and accept the contract terms.

That means including a clause — or a standalone attachment — in which the creative signs:

“I understand my company is providing the services, but I personally agree to all terms — including the work-for-hire and ownership transfer provisions.”

There are two ways to do this:

1. A Standalone Inducement Letter

A separate document signed by the individual acknowledging the deal and agreeing to the IP terms.

2. A Built-In Dual Signature Block

The company signs as the service provider.
The individual signs as the creator assigning rights.
Both signatures appear on the agreement.

This is the gold standard for distributors, E&O insurers, and sales agents.

🔗 Related reading for context:
Editor or Composer? Use This Contract or Risk a Lawsuit →

How Thoolie Fixes This

Thoolie’s Work-for-Hire Agreement includes:

• a built-in inducement letter (triggered through logic)
• signature blocks for both the loan-out and the individual
• clear language assigning all rights from the creator to the production
• festival- and distributor-friendly chain of title language
• options for editors, composers, designers, and all creative roles

Whether your contractor is an individual or a full-fledged corporation, the template ensures you get the rights you’re paying for.

👉 Download the Work-for-Hire Agreement Template →

When This Matters Most

Loan-out issues appear in nearly every department.
You need dual signatures when working with:

• Directors of photography with personal LLCs
• Editors who operate as S-Corps
• Composers scoring through their loan-out
• Designers or animators with business entities
• Talent represented by agencies requiring loan-out deals
• Crew hired through their own companies on non-union productions

If someone is creating original work and they run it through their company, assume you need both signatures unless an experienced entertainment attorney tells you otherwise.

Related Posts in This Series

Add the following internal links:

• 👉 Do You Own What You Paid For? The Copyright Trap for Filmmakers
• 👉 Editor or Composer? Use This Contract or Risk a Lawsuit
• 👉 Freelancer vs Employee in Film: Know the Legal Difference
• 👉 Work-for-Hire Agreement for Film: The Complete Indie Guide

FAQ

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Read the Work-for-Hire Agreement for Film: The Complete Indie Guide.