Transfer personal residence to LLC?

Question

How difficult is it to transfer a personal residence to an LLC?  Is it as simple as signing a quit claim deed?

Christopher Winkler · Answer

You are better off creating a trust and putting it in there, it won't trigger a due on sale clause. There are several guru's teaching land trusts...

Eamonn McElroy · Answer

@Hen Ley

Some jurisdictions do not allow a homestead exemption on a property owned by an LLC -- even if the LLC is wholly-owned by an individual and the property is used as said individual's primary residence.

Have you examined your jurisdiction's rules?

Brandon Sturgill · Answer

@Hen Ley pretty much...but quit claims are not very tight...you always want general warranty...or maybe special warranty. Anyway, there's really no benefit to transferring a personal residence into an LLC...the downside is you trigger the acceleration clause in your mortgage (assuming you have a mortgage)...the bank can call your note balance due if you fail to get permission to transfer title with debt in place.

Dave Toelkes · Answer

An LLC is a business entity.  If you just use the LLC as a title holding vehicle, what is the business purpose of the LLC?   I don't see any benefit to be gained by putting your primary residence in an LLC.  On significant disadvange that would concern me is loss of the homestead exclusion in the event of bankruptcy,.   In many states, your primary residence is escluded my mandatory liquidation requirements in a bankruptcy proceeding.  I fear you may lose that protection if the LLC is the owner of your primary residence.  Be sure to consult a local resal estate attorney in your area before taking any action.

Hen Ley · Answer

Homeowner's exemption would still apply, and our lenders would allow for it to be in an LLC, so the note being called is not an issue.  I had heard that more is required than simply using a deed to sign it over, however, and want to ensure we take care of it properly...

Transfer personal residence to LLC?

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