Rental Property Investor · Fort Knox, KY · Member since 2019 · 8 posts · 0 votes
When using Conventional or Government Backed Financing, at what point do you safely move the property to a land trust/llc without triggering due on sale clause.
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
6y
If you move your property into an entity, technically you have violated due on sale clause. It doesn't matter if you do that day 1 or day 10,000. The real questions is will you get caught, and will the bank will take any action.
By trying to mitigate liability risk you have increased your financial risk. Personally, I felt more comfortable just buying great insurance.
Attorney · WA · Member since 2020 · 43 posts · 59 votes
6y
@Account Closed
Typically it's a good idea to wait 30 days before recording the deed the make sure nothing is amiss. You will notice I said wait to record not "Wait" to execute a deed. A common mistake made by individuals is the belief a deed must be recorded to be valid. This is not the case. You can deed the property to your entity, and it is a legal transfer irrespective if you record the deed; however, you will want to record to prevent personal liens from attaching to the property. The "due on sale" is not an issue in my experience. Freddie allows you to move the property into an entity without violating the acceleration clause. As far as other lenders, so long as you pay the mortgage, insure the property, and pay property taxes, the likelihood of acceleration is very small.