LLC Formation & due-on-sale clause (aka "acceleration clause")

[Alonzo Garza]

Hello all,

Quick question about renting out my current primary residence...  Appreciate any feedback!

If I were to move to a new house and put my current primary residence under a newly formed LLC, would this trigger a due-on-clause event from my bank?

I've heard that if you transfer ownership (in this case from me to the new LLC), that the mortgage company could exercise the due-on-sale clause?

Here @ BiggerPockets.com, Brandon Turner has also mentioned you could call the bank and explain to them that this is a 'performing note' and maybe that would help call them off but wondering if anyone has dealt with similar situations?

Definition I found online - A due-on-sale clause is a clause in a loan or promissory note that stipulates that the full balance of the loan may be called due (repaid in full) upon sale or transfer of ownership of the property used to secure the note. The lender has the contractual right, but not the obligation, to call the note due in such a circumstance.