Buyout partners in LLC that has DSCR

[Gregory Wesley]

I'm considering buying out my two partners in an LLC. We own one property in the LLC. We currently have a DSCR and I'm trying to avoid the cost of refinancing if possible. One of my concerns is while the mortgage is in the name of the LLC, one of the other partners has a personal guarantee on the loan. Is it possible to change the person who has the personal guarantee without refinancing? When we did the DSCR, they said this loan wouldn't affect his personal credit. Could we just adjust the LLC ownership and not worry about changing the personal guarantee?

[Matthew Crivelli]

Quote from @Gregory Wesley:

I'm considering buying out my two partners in an LLC. We own one property in the LLC. We currently have a DSCR and I'm trying to avoid the cost of refinancing if possible. One of my concerns is while the mortgage is in the name of the LLC, one of the other partners has a personal guarantee on the loan. Is it possible to change the person who has the personal guarantee without refinancing? When we did the DSCR, they said this loan wouldn't affect his personal credit. Could we just adjust the LLC ownership and not worry about changing the personal guarantee?

The partner who wants out will be attached to the property until the loan has been paid off. You can not remove a personal guarantee, sell, refinance, or pay off the loan in cash will be the only options to truly remove their interest. 

As an example, you buy the partner out, a year later the property gets foreclosed on. The bought out partner would still be apart of the foreclosure proceedings. (I'm not saying you are getting foreclosed on, just using this as an example)