Form a LLC after you purchased the property?

7 Replies

Hi All 

Here is the situation: I have spotted a potential deal and looking for equity partner, my uncle showed great interest and agreeing to partner with me on this deal, however due to the time limit we didn't file a LLC before we submit the offer. So the question is can we get the house under our names first then form an LLC and transfer the title? Or is there any better way to go about it? Any suggestion is welcomed! Thanks a million!

Adil

Originally posted by @Adil Oghlan :

Hi All 

Here is the situation: I have spotted a potential deal and looking for equity partner, my uncle showed great interest and agreeing to partner with me on this deal, however due to the time limit we didn't file a LLC before we submit the offer. So the question is can we get the house under our names first then form an LLC and transfer the title? Or is there any better way to go about it? Any suggestion is welcomed! Thanks a million!

Adil

 You can do that as long as you don't have a mortgage on the property.  You might also incur a second set of transfer taxes, depending upon your local laws in the state you live in.

You may also be able to transfer the property into an LLC even if there is a mortgage. When I did this in the past, they were willing to do it but only at double the interest that I was already paying on the mortgage. May seem unreasonable to some, but others may not have been willing at all.

You can try it without telling the note holder but you will be triggering the due on sale clause.  And they will almost surely find out.  It's up to you if you think the risk/reward is worth it.

@Daniel Mohnkern  It's good to know you can do that even with the loan. In my case we will be buying with cash and refi after. So there should be no problem, my only concern now is transfer taxes and fee associate with it..  

Transfer the property back into your name, create a land trust and place property into land trust. Make LLC beneficiary of land trust. Problem solved! A land trust helps avoid "due on sale" clause, transfer taxes, probate, and keeps your real estate holdings private. Google land trust and do your own research, but I am certain you will find that this is the solution to your problem. Look up Mr land trust Randy Hughes to get more education. Contact a real estate attorney who specializes in land trusts asap. Best of luck.


Changing the beneficiary of a land trust may also trigger a due on sale clause, though it is harder for the lender to discover. 

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