Moving property from personal to LLC

[Cosmo DePinto]

Hi. I have 4 SFH investment properties….all bought in my name. I've owned them for a few years now…can I move them into LLC's now without refinancing? I'm hearing mixed opinions from people I know.

[Patrick Roberts]

The unfortunate answer is, "it depends." It will depend on the the circumstances, the loan type, and the entity type. If I remember correctly, there is a provision for properties with Fannie and Freddie loans to be moved to single-member LLCs after 12 months of seasoning if the only member of the LLC is the owner/borrower on the loan.

For govvy loans, the Due on Sale clause will be available to your note holder - having an LLC take title to the deed (most commonly via a quit claim) will expose you to this clause. The note holder can accelerate the loan if the find out about the change in ownership.

Same goes for commercial loans. The note holder will likely have a say. Almost all mortgage loans these days have Due on Sale clauses, so it comes down to A) whether they find out (usually from changes in the insurance policy), and B) whether they choose to call the loan.