Quit Claim Transfer to LLC but Original Name Required to Remain

Portland, Oregon
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Quit Claim Transfer to LLC but Original Name Required to Remain

Tom Dieringer
Investor · OR · Member since 2020 · 62 posts · 32 votes

I have a personally owned SF rental property (my name on deed, my name of mortgage) that I want to transfer via quit claim to my wholly owned, disregarded entity LLC. I preemptively checked with the lender to see if they had any issues with this. They are are fine with it with one exception - I still need to leave my name on the deed. I can add whoever I wish, but my name needs to remain.

I'm doing this for legal protection. I do already have a personal umbrella to back up my rental property insurance. I just wanted another layer of protection. In my opinion, keeping my name on the deed negates the protective benefit of the quit claim transfer and holding the property in my LLC. Am I missing something?

If I'm correct and there is no/negligible benefit, does anyone recommend having an additional umbrella just for the LLC?

Thanks so much for your thoughts.

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
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@Tom Dieringer

I ask that because people think they need an LLC from some lawsuit. But if you write down reasons why you could get sued 99.99% of them can be resolved through an umbrella insurance policy and/or using a property manager.

If it's a commercial property yes you use a LLC but for 1-4 unit rentals, typically the LLC is just an added expense.

Also people will say well I don't have a Property manager so let me put it in a LLC - well you will be acting as the property manager so if the tenant does sue they sue the LLC and property manager - so you will get sued anyways.

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  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    4y

    Tom,

    Fannie Mae & Fredie Mac will only buy and guarantee loans that are issued to a "person" not an "Entity or business". So your not going to have much luck with the lender taking you off the deed they have to have a "personal guarantee". But you can use programs and loans like DSCR and Non/Qm which allow you to close on an "LLC or Trust".

    When you sign the RESPA documents of any Conventioanl loan it states on "All" loans Deed "Cannot" be held in a Entity such as an LLC, Trust and cannot be "Assumed" unless its a VA Loan for "Assumption clause" only.

    You may not need to refinance but if you need to pull out any cash right now just use a DSCR loan and close in your LLC or Trust.

    [email protected]727-637-4289
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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    leaving your name on the deed contradicts what your trying to do.

    You don't need an LLC for one mortgaged property.

    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    4y

    @Tom Dieringer

    Let’s protection from what?

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  • Tom Dieringer
    Rental Property Investor · Portland, OR · Member since 2019 · 7 posts · 0 votes
    4y
    Quote from @John Underwood:

    leaving your name on the deed contradicts what your trying to do.

    You don't need an LLC for one mortgaged property.

    Thanks for confirmation of the contradiction, John. I do have other properties in LLC. For this one, the lender gave a different response than others.
    0Reply
  • Tom Dieringer
    Rental Property Investor · Portland, OR · Member since 2019 · 7 posts · 0 votes
    4y
    Quote from @Chris Seveney:

    @Tom Dieringer

    Let’s protection from what?

    Aggressive tenant lawsuits
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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    4y

    @Tom Dieringer

    I ask that because people think they need an LLC from some lawsuit. But if you write down reasons why you could get sued 99.99% of them can be resolved through an umbrella insurance policy and/or using a property manager.

    If it's a commercial property yes you use a LLC but for 1-4 unit rentals, typically the LLC is just an added expense.

    Also people will say well I don't have a Property manager so let me put it in a LLC - well you will be acting as the property manager so if the tenant does sue they sue the LLC and property manager - so you will get sued anyways.

    7e investments53 Reviews
    WebsiteView Page
    3Reply
  • Becca F.
    Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes
    4y

    @Chris Seveney

    Thanks for addressing this. When I asked my lender about having my SFH under an LLC they said I would need to refinance my mortgage. I wouldn't refinance now to a higher interest rate. I have another rental now and a multi-unit with co-investors, not under LLCs I purchased additional umbrella insurance.

    Most of my real estate investor friends who own 1 to 4 properties don't have LLCs. The only one I know who has an LLC owns 6 duplexes and an apartment building. I've heard that LLCs give you anonymity in case you are sued or people are snooping around for whatever reason.

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