Rental Property Investor · Phoenix, AZ · Member since 2019 · 1 post · 0 votes
Hello,
I have come across a little bit of conflicting information regarding transferring rental property deeds to an LLC. I currently rent out a property that was my previous primary residence and have created an LLC. I plan to speak to my mortgage company and see what options I have to transfer the deed to my LLC. My question is, if the mortgage company does not allow me to transfer title, what other steps can I take? I would really like to avoid refinancing the property, due to the terms of the mortgage being that of a primary residence (30 year term, 3.65% interest).
Attorney · Birmingham, AL · Member since 2022 · 220 posts · 83 votes
4y
Depending on the type of property and type of loan, the property can be moved post closing to a trust without trigger the due on sale clause. This is due to an exception called the St. Germain Act. The St. Germain Act states that a property with less than 5 units can be transferred under certain circumstances. The full text of the st gertmain Act can be found here: https://www.law.cornell.edu/uscode/text/12/1701j-3. If you have a residential SFH, you should not have an issue transferring title post closing a land trust (which can be connected to an LLC) as long as you remain the ultimate owner.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
4y
@Eloy Romero this is one of oldest debates here on BP. Your lender is NOT going to say its ok to transfer the property to an LLC since it would make it much harder for them to foreclose on you. Many folks here on BP transfer the title using a quitclaim deed, and they just do this quietly. If they keep paying, the lender likely will never see.
If you put the property in an LLC, you are going to get worse financing. That is the tradeoff and that is why most people who use this strategy get the financing set first and then transfer it.
I think the bigger question you should be asking yourself is whether you really need an LLC, and also if you are prepared for the extra costs. You are running a business at that point with a business checking account, full set of books and records and reporting that has to be done by your CPA. This won't cost $50. You also will have issues when you sell or refinance in the future as you have to quitclaim deed out of the LLC anyways.
As always, consult your LOCAL attorney there in your market to get better (real) advice.
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
4y
I'll save you the trouble- your mortgage company will tell you that you can't do it.
You need to speak with your attorney. There are a million ways to skin this cat, but every option has pros and cons. You need an attorney to guide you so that you not only understand the strategy, but so you have someone to defend it if you run in to trouble.
For a direct answer to your question, you can do a simply quit claim deed. In my state it costs $20 and takes about 2 minutes.
Attorney · Birmingham, AL · Member since 2022 · 220 posts · 83 votes
4y
Depending on the type of property and type of loan, the property can be moved post closing to a trust without trigger the due on sale clause. This is due to an exception called the St. Germain Act. The St. Germain Act states that a property with less than 5 units can be transferred under certain circumstances. The full text of the st gertmain Act can be found here: https://www.law.cornell.edu/uscode/text/12/1701j-3. If you have a residential SFH, you should not have an issue transferring title post closing a land trust (which can be connected to an LLC) as long as you remain the ultimate owner.