Any way to move properties with a mortgage into my LLC? 11 posts by 6 users

Posted: 05/04/2008 at 09:21AM

I'd like to move some rental properties that are currently held in my name into my LLC for liability protection. These props. have mortgages which, of course, have " due on transfer" clauses.

I'm guessing that the only way to move them to the LLC would be to refianace them, but am hoping somebody might have some other ideas. It would be nice if the lender (Wells-Fargo) would allow an assumption by the LLC, but I don't think that's likely since they would lose the ability to go after my personal assets if I defaulted. In my opinion, that doesn't seem like much of an issue since the loans are all at less than 80% LTV. If they allowed the assumption, they would benefit by keeping good performing loans versus loosing them if I have to refinance. I think maybe with current events, they would just as soon have the cash from a payoff.

Anybody have any ideas? Thanks.

JMac

Posted: 05/07/2008 at 06:57AM

Jon,
If I do that won't the bank loose their security interest in the property? I'll still be on the note and responsible for the debt, but they would loose the ability to foreclose if I were to default. I've heard the same advice also, but IF the lender was to call the note due, I would be faced with the very difficult situation of having to pay off the properties or attempt to re-finance under much less desirable terms than I currently have. In short, I can't just cross my fingers and HOPE they won't call the notes due without some addional assurances because if they did, the consequences could be devastating.

I've heard people say that the bank would be foolish to call in a performing loan, but I also think that in todays climate they are more concerned with maintaining solvency than maximizing profit.

JMac

Posted: 05/07/2008 at 10:20AM

This is something that I’ve done numerous times. I’ve never had a problem. One lender simply had me sign a document attesting to the fact that I am the sole member of the LLC. However, you may wish to check with your state regarding transfer taxes. In Nevada it was an exempt transaction and not subject to tax.

8)

Posted: 05/08/2008 at 09:16AM

You are not going to be able to change the mortgage from your name to the LLC name. That's just not going to happen. At best, you would have to refi, and get the new loan in the LLCs name. It might be looked at as a sale (you selling to the LLC) and then it would be a purchase money loan and a significant down payment would be required. Just start sending in the payments out of your LLC account.

Posted: 05/18/2008 at 01:21PM

I have a question that hopefully has the same answer. In addition to our own house, we own a house that we rent to our daughter. Since we're going overseas for about 3 weeks in July, we'd like to develop a Revocable Living Trust before we go. So, I'm wondering if I can use the 'quit claim' deed to transfer these assets into the RLT so we don't want to refinance.

Thanks, Jim Smiley
Montclair, Virginia

Posted: 06/01/2008 at 05:16PM

Just something to think about before moving property into an LLC these days (not saying it's the wrong thing to do for asset protection, but you should have all the facts):

http://www.taxloopholes.com/connect/blog/diane-kennedy/2008/05/do-you-have-llc-you-might-not-