Transferring Deeds in Indiana Properties to LLC
Hi BP Forum!
I now have 5 properties in Indiana under my personal name and want to start transferring the deeds to the LLC I created in Indiana. Can I do this myself or do I have to hire an attorney specifically in Indiana to process this? If I do have to hire an attorney, do I have to hire someone in Indiana or can it be in Georgia (I'm physically located in Georgia. Would like to hire someone local if possible).
I do not believe you need to be an attorney to do this, but for few bucks it is probably worth the peace of mind that the paperwork was done correctly. Who set up your Indiana LLC? Normally, that attorney would be a great place to start as they probably have done deed transfers.
Before you transfer all those properties, you should be aware of some business implications of doing so. First, it will limit your refinance options later. You will either need to get a commercial loan (with worse terms) or you will need to transfer the properties back into your name and wait 6 months before you can refi with a conventional mortgage.
It is also critical that you know how to maintain the corporate formalities and to faithfully execute them. According to Garret Sutton, 50% of the LLCs get thrown out in court for not doing these correctly. Clearly many people have set up LLCs hoping it provides them some protection, but in reality they just wasted time and money.
Hi Jin,
You can make a transfer of a property yourself if you do the research. You will need to create a Deed and any ancillary documents that conform to the State and local rules where the properties are located. If you are not interested in doing this research and creating or finding the Deed, you should hire a title company or an attorney to create the document.
Thank you both!!! This is super helpful :)
I am considering doing this myself. If they are paid off, it is super easy. If they still have mortgages, it is a little more complicated.
But either way, you can just do it with a title company. Hocker Title company is who I would recommend. (Their on-staff lawyer is great if you need them). Other suggestions are Monument Title and Investors Title. (all in Indianapolis).
If you do have mortgages, (like I do), I can recommend the lender I am working with -- right now for us, it makes more financial sense to keep them in our individual names instead of rolling over to a commercial loan.
This may seem like a rookie question, but coming from a rookie here goes :-) I am also out of state (Texas) and have a duplex in Indianapolis. Do I create an LLC in Indiana or can I do that in my home state of Texas? My goal is to eventually have more properties, but they do not necessarily have to be in the same state, which then leads into the next concern. Can I have just one LLC for all of my real estate across the country or do I have to have an LLC in each state that I invest in? I appreciate everyone's feedback and happy new year!
Hi Jeff,
It is not commonly recommended to use a foreign LLC to own property in another State without registering the entity to do business in that State. Not registering the foreign LLC to do business in the State that it owns property can result in fines, and, if the LLC is sued, the LLC being invalidated. Based on that, you could have a single LLC that owns properties in different States, but you would have to register that LLC in each State. This means that you will have to comply with the regulations of each State that the LLC is registered in. Alternatively, you could create separate LLCs in each of the States that you own property in. If you wanted to avoid this issue, you could have a single LLC that owns the properties in a less direct way. If the LLC owns Land Trusts and the Land Trusts own the properties, this can usually avoid the foreign LLC registeration issues described above.
Thank you Jason! Will have to do some more research but at least now I have some direction!
Cheers!
Jeff
Quote from @Greg Scott:
I do not believe you need to be an attorney to do this, but for few bucks it is probably worth the peace of mind that the paperwork was done correctly. Who set up your Indiana LLC? Normally, that attorney would be a great place to start as they probably have done deed transfers.
Before you transfer all those properties, you should be aware of some business implications of doing so. First, it will limit your refinance options later. You will either need to get a commercial loan (with worse terms) or you will need to transfer the properties back into your name and wait 6 months before you can refi with a conventional mortgage.
It is also critical that you know how to maintain the corporate formalities and to faithfully execute them. According to Garret Sutton, 50% of the LLCs get thrown out in court for not doing these correctly. Clearly many people have set up LLCs hoping it provides them some protection, but in reality they just wasted time and money.
If you're only transferring the title of the property from your personal name into the LLC, how does that affect the refinance options if the loan is still under your personal name?
Any tips on maintaining and executing on formalities?
Hello, I am wondering if you get taxed for transferring your property to an LLC of your own in Indiana. I am planning to do this, but my cpa said that will cost me capital gain tax. Curious if you went through the same thing.