If you purchase investment property in your own name, and get a mortgage on that property, etc, and then decide that you want to limit personal liability by moving the properties to an LLC, how do you go about doing that? Do you sell it to the LLC for $1? but then what happens to the mortgage? do you have to change the name from the person holding the mortgage to the name of the LLC?
Once you have an LLC established what do you need to do to make the transfers wholly legal. thanks in advance for your responses.
2006-11-27 05:00:09 · 6 answers · asked by J A 2 in Business & Finance ➔ Renting & Real Estate
It may not be as simple as you hoped. Find a competent real estate attorney to review your documents, specifically your mortgage.
Transferring ownership to your LLC could potentially trigger the "due on sale" clause, which almost all mortgages have. Which means your loan is called due, in full, instantly. Just like it would be if you sold the home to any other buyer. The same thing can happen to people that buy an investment property and record a "contract for deed", whereby you are effectively the lender for your new buyer. This has bitten many people in the behind.
Ultimately, it's unlikely the bank will check the title to your property and discover that you quit-claimed the property to your LLC. You may even wish to call the servicing company and see what they have to say about it.
2006-11-27 05:22:38 · answer #1 · answered by Anonymous · 1⤊ 0⤋
You should have had the LLC buy the property. You will end up paying extra fees. Do not transfer te property to the LLC. Sell the property to the LLC at a personal loss. You can probably take a loss on your taxes that way. As always, check with your legal professionals before taking such actions.
2016-05-23 10:49:23 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Technically you just issue a deed to the LLC. No one should EVER do such a transfer without talking to a lawyer. It could violate the mortgage terms; result in a substantial transfer charge or a huge real estate tax increase or any number of other tax or title problems.
2006-11-27 06:43:10 · answer #3 · answered by Anonymous · 0⤊ 0⤋
You just change the title over to the LLC. The bank doesn't care as how it is titled doesn't effect them you are still the owner. Most have clauses in there lending agreements allowing this. The LLC asset is still subject to their mortgage.
2006-11-27 05:05:03 · answer #4 · answered by Jim7368 3 · 0⤊ 0⤋
You just transfer the property into the new entity. These types of transfer are know as "not for consideration" conveyances since no money changes hands. You need a local title company to help you do it properly. They will charge transfer per deed and a recording fee.
2006-11-27 06:13:33 · answer #5 · answered by boston857 5 · 0⤊ 0⤋
quick transfer of title. Mortgage company still has the 1st lein on the house. I think it costs like $10. It's easy to do.
2006-11-27 05:23:08 · answer #6 · answered by Jonathan 2 · 0⤊ 0⤋