Austin, TX · Member since 2017 · 20 posts · 2 votes
Hey everyone! Can someone help me out with this?
I purchased my first investment property (woohoo!!), and the mortgage company sold it to M&T Bank in Buffalo. Of course, I want to protect my asset & transfer to an LLC... But, as we all know, the bank can call on the note with the Due on Sale Clause if I transfer it to my LLC....
So, I called M&T bank's mortgage department to get more clarification and wasn't able to get a straight answer... just lots of confusion and verbiage like "we can’t do that kind of transaction" and "you'll have to refinance." Does that sound like the answer you’d get from a bank that would call on the note? Any help here is greatly appreciated!!
Rental Property Investor · Colorado Springs, CO · Member since 2020 · 433 posts · 284 votes
6y
My experience has been that the person you call and talk to, or the line level employee will tell you that "you can't do that" , and will threaten the "due on sale" clause. I am not an attorney ,but we have a few duplexes with mortgages that we conveyed title to our LLC. No issue until you try and refinance, then you have to move it back to the original borrowers names, complete your transaction, then move it back again. not a big deal, just more brain damage.
As long as you are paying the note and are current the mortgage company doesn't seem to mind, they are still getting paid, even with a company check.
Transferring the property into the LLC is one thing but the non-LLC mortgage still has you on the hook. Could you refinance to conicide with the change in ownwership to the LLC? More cost, but you get the protection you want.