Transferring a property purchased in your name to an LLC. How does this work?
No legal advice here, but we have frequently quit claimed deeds between our companies before. Simple and easy, look and you can probably find a quit claim deed to do it yourself. My attorney only charges $50 so I let him do it.
You should talk to your CPA and/or RE attorney. The mechanics are easy, but there are other considerations. If it's a multi member LLC that's not just you and your husband (if you're in a community property state) you could be changing your tax situation. Also if you have a mortgage on the property the transfer could violate your lending agreement if there's a "due on sale" clause that causes the mortgage to be due in full upon sale (and they'd consider the transfer a sale). Do they regularly check for this if the the mortgage is being paid? Probably no. But better to know beforehand if your mortgage contains this clause. Possibly other considerations too..best to vet it with the pros based on your situation.
I would say to give your county recording office a call first. If free and clear properties, the office will usually have a quick answer for you on what is the easiest. They have seem it a million times. I have used quit claim deeds and did all the paper work myself.
If you have a mortgage, you might consider putting your property in a land trust with the LLC as a beneficiary to not trigger the due on sale clause, the clause @Melanie Smith mentioned. Transferring it into a trust is the only allowable transfer.
Again, it depends on location and your situation.
You have to file a quite claim deed with the recorders office make sure you specify you are still the owner and so you do not pay "Transfer Tax"
We have a winner! Melanie has the best answer!
A quit claim breaks the chain of title and can make it more difficult for your LLC or the next buyer to insure title.
A General Warrant Deed conveys with title being guaranteed, any title issue for your LLC can come back on you, if you warrant title you have coverage that comes back to you personally as you held coverage.
Title runs forever, but at about 50 years, you should be in the clear as to any claims.
Melanie is correct in advising you to see your attorney as well, disposing the only property held, reduces assets, are you sure there are no other interests involved?
Quit Claim Deeds are really only the proper deed in a few instances, conveying interests among related parties, into trusts for estate planning where the beneficiary doesn't change or in some divorce matter or in gifting property, the other is in giving a deed in lieu of foreclosure from borrower(s) to a lender/lien holder.
It is better to use a General Warranty Deed or Special Warranty Deed excepting out any lien assumed. Before you start using deeds contact your title insurance company as to the proper use of deeds as to title coverage, ALTA has had recent requirements changed and, ultimately, what is acceptable to them in your state will govern, your attorney can advise you as to the proper deeds as to the risks you retain or convey for your situation.
The only caution I have, saying a lender doesn't look, isn't really true, they do look, loans are audited, about 3 times after making them in the first year and thereafter at random, unless there is something else that pops up on the radar. Your deeding a property can be a violation of your security agreement. Is it a big risk? Usually not and you can cure the matter if need be.....might be brain damage, but you can ask for forgiveness.
See your attorney! :)
Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com
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