Investor · Tallahassee, FL · Member since 2015 · 6 posts · 1 vote
I've had some very preliminary discussions with Hard Money Lenders, both have stated they only loan to LLC Entities. My natural assumption is that it's easier to foreclose on a property that's held by LLC vs an individual, especially in the State of Florida. Anyone have any insight to this requirement?
Individuals may move into a home even if they state and sign statements that they will not do so. That can change the rules for foreclosure and it can also expose the lender to claims under Dodd-Frank and the SAFE Act. I foreclosed on a mortgage I purchased a few years ago. The loan docs clearly stated it was for an investment property. The borrower filed for a homestead exemption for property taxes and even though she had another homestead exemption on another property that she claimed as her principal residence--she was obviously making at least one false statement--we had to treat her as an owner occupant when we foreclosed.
@Sylvester Thompson other than its so much easier to foreclosure on an llc than an individual no real difference. i do both In the state of Florida. Individuals and llc. Only other reason i could think of Is to make sure it's investment and not owner occupied.
Individuals may move into a home even if they state and sign statements that they will not do so. That can change the rules for foreclosure and it can also expose the lender to claims under Dodd-Frank and the SAFE Act. I foreclosed on a mortgage I purchased a few years ago. The loan docs clearly stated it was for an investment property. The borrower filed for a homestead exemption for property taxes and even though she had another homestead exemption on another property that she claimed as her principal residence--she was obviously making at least one false statement--we had to treat her as an owner occupant when we foreclosed.
@Sylvester ThompsonI do HML and am in Florida. I lend only to LLC's or S-Corps due to Dodd-Frank. We have borrowers sign affidavits stating the money is borrowed for business purposes only. The last thing I want to deal with is a homeowner claiming I am in violation of DF. If a potential borrower wants money and their property is not in an LLC or S-Corp, they can form one and transfer it to accomplish this requirement.
Dodd-Frank has specific requirements that must be met. If a lender does more than x amount per year they are subject to DF. Lending to entities allows a HML to be exempt from DF. HML typically charge high rates and only offer short terms. The short term and / or IO loans of 24 months or less won't be in compliance with Dodd-Frank.
In the process of purchasing a property in an HOA with approved hard money going to our LLC. HOA docs say ownership by non-persons, such as corporations and business named partnerships is prohibited. Any way around this?