Transferring 2 properties from personal ownership to LLC

11 Replies

Hello experts,

We have 3 rentals, 2 with mortgages, and started an LLC. We are buying more properties for sure and want to do things optimally. Does the bank allow transferring title to an LLC, or will require a re-finance with the LLC "Buying" the property? The third rental is 100% owned by us.

We want to BRRR all 3, but want to get everything into the LLC.

Thanks!

@Willie Flint @Tina McDonald Hey there!

So, with the properties that still have a mortgage, MOST banks will want you to refinance into the LLCs name.  You could combine this action with say a cash out refi.

For properties that are 100% owned, a simple filing of a quitclaim deed with the town will transfer ownership.

Or that's more or less how it works here in CT.

Good luck.

@Kern Belfon

I am assuming you are referring to the ones that have mortgages.

The short answers is that the transfer is a legal event of default. Technically transferring to an LLC could cause a lender to use the "due on sale" clause to call the loan due. But it never really happens. If the lender makes a deal you can, simply transfer it back as you are given 30 days to cure.

If you don't have mortgages on the property, you simply create a deed to your LLC and file it with your local clerk of courts. Don't be afraid to talk to your lender about due on sales clauses, or transferring to an LLC. Often they're fine with it and will help you with the paperwork.

I think we will just file the quit claim deed for the house wholly owned to the LLC. The other 2 with mortgages, we will leave as-is as I don't need any risk with the bank calling in the loan, even if it is unlikely. (Thanks Sean!). We'll pay off those loans quickly, then file the quit claim deeds on those as well when paid off. Too much going on simultaneously, so simple is good for now.

I really appreciate the input everybody!

Willie

@Willie Flint

Do not use a quit claim deed. Use a warranty deed to avoid loosing your title insurance.

Look also at using land trust to avoid the due on sale clause.

Last, depending on the value of your properties, you may want to put each property in different LLC as in case of inside liability in one of them you dont want to risk loosing all three of them at the same time.

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