Deed SFH (w/ mortgage) to LLC, OK by lender via verbal agreement

2 Replies

Hello BiggerPockets,

I'm new to real estate investing. I'm having trouble finding a traditional lender (bank or mortgage broker) who will lend to a newly formed LLC for purposes of buying buy-and-hold rentals. I intend to acquire in my own name then deed it over to LLC. I've read many posts here that indicate this is common practice and most importantly still provides personal asset protection though you may lose some anonymity this way. If I'm wrong on this point, please correct me.

I contacted my lender and they are a local bank which holds the mortgage loans in-house. So no risk of the rules of the game changing down the line in that regard. This lender assured me that as long as I stayed current on the loan, deeding over to the LLC after close would not trigger the due on sales clause as far as they were concerned. Again however, I was advised of this via a telephone call with a loan officer who spoke with the bank manager, so nothing specific in writing. Am I potentially opening myself up to problems down the line here? I do not see a way to proceed otherwise without just keeping the property in my personal name which I do not want to do (even with umbrella insurance). I appreciate the insight in advance.

@Chris Kern more than likely you will still sign an acceleration clause and then you have something in writing that you signed stating they have the option to call the loan. So doesn't really matter if it's verbal or not, if that is signed it will always loom over you. Now banks are not in business to take real estate as it's more of a headache to them, they just want their money. I'll just leave it at that. If you are looking for someone to lend to your LLC, even if new, there are options out there. Also, if your traditional loan is a Fannie Mae backed loan then you are able to transfer the property to a LLC without risk of acceleration as long as the physical lender does not have extra rules.

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