How much should it cost to transfer my property to an LLC?

Question

I just bought my first property I am working with a lawyer charging $260 / hour. I have no idea what the standard rate is for these services ism particularly in Ohio, so if someone can provide some input here it would greatly appreciated. It seems high to me but I'd like to hear what you guys have to say. Thanks in advance!

Greg Scott · Answer

He is probably drawing up a Quit Claim Deed, which is usually a 1-page document. 95% of what is in a Quit Claim is copy / paste so it shouldn't take that long. If you have other properties in that same county, you could probably just change the property descriptions as a DIY Quit Claim. If they charge more than $260, I would ask why.

Chris Seveney · Answer

@Nicholas Sorace

As mentioned why you putting it in a llc? What value is it gaining?

You are spending how many thousands to protect what ?

Luis Alvarez · Answer

Transferring a rental property into LLC does limit your liability, but keyword there is limit. There is nothing that exists that will completely insulate your rental property from complete liability, because the minute it is rented, you are exposing yourself to liability.

@Nicholas Sorace Let's assume you transfer the property into the LLC and you are the sole member/manager. If some cause of action were to arise, the exposed party to litigation would be the legal title owner (in this case the LLC) and any savvy litigation attorney would also name the principal or managing members (in this case, you) in the lawsuit. Now I've seen other threads on the forums claiming "why put it in an LLC if you're going to be sued anyways?!"...the reason any and all parties that could be named in a lawsuit are named from the beginning is because in the discovery process of litigation, it may be uncovered that you (personally) are liable (through piercing your corporate veil or other deliberate acts) and that suing attorney can have additional recourses (EG your personal assets) to go after. If they don't name all individuals in the beginning of the lawsuit and sufficient time passes, they cannot later add defendants to the suit. This is typically the civil procedure you'll see, but it can vary state to state.

An LLC acts as a kevlar dome over your rental property. It protects it from outside liability (let's say you drive recklessly and kill someone, and your personal car insurance gets exhausted, the suing parties cannot come after the rental property because it is not personally owned by you). An LLC also insulates the inside liability and contains it to just the assets held within that LLC (the rental property in this case).

The presumption is that legal entities are excellent tools, as long as you follow the corporate maintenance and corporate formalities. This means having separate bank account, not commingling funds, have an Operating Agreement, have simple occasional "minutes" reflecting actions of the entity, etc. etc. Some may tell you "that's a lot of work" and "why do all that?"...the answer is because this is what professionals do and it's the price of admission to really establish your real estate business properly from the outset.

Having a lien, loan, etc. on the property does not indicate personal liability exposure to real property because being the borrower on a loan does not equate to holding legal title on the underlying property. Although, obviously, often it is true that the borrower is also the legal title holder...but they are not necessarily interconnected.

Remington Lyman · Answer

$260 is cheap

Luis Alvarez · Answer

@Nicholas Sorace

I may be biased, but $260/hour for an attorney is a steal...even for Ohio. Second, you didn't mention how long they estimated it would take.

They should be drawing up a Grant Deed (not a Quitclaim Deed) so that all of the covenants are transferred with the title. Secondly. I presume the county you're in has additional change in ownership forms which should be filed. Again, it may not take them that long, but unless you or someone you know is experienced in drafting legal documents and transferring title, it's called paying the price of admission. Can you find forms on Google? Sure, but that's something you've got to live with. And it may not come back to bite you, but just something to be aware of.

Next, the bigger question is: Is that LLC already set up? Properly? With an Operating Agreement, separate bank account, etc.?

Contrary to what you may hear, I do believe that you should have properties in LLCs, for reasons I won't get into here, but let's say I sleep well at night having full first-hand knowledge of litigation procedures and knowing that if my real estate endeavors fail, it won't be due to collapse from liability.

Alfath Ahmed · Answer

I have a good attorney that I work with. It should just be a one time fee to quit-claim a property to your LLC. Reach out to me, I can send you some referrals.

Joseph Rudolph · Answer

You put the mortgage in your LLC. Most state laws require lenders to allow that HOWEVER the LLC has no credit history so the lender is allowed to keep you responsible for the mortgage. HOWEVER an LLC can shield your other assets from lawsuits. A fire etc resulting valid claims in excess of your insurance coverage can wipe you out otherwise.

Ian Walsh · Answer

Usually title fees and transfer tax.

How much should it cost to transfer my property to an LLC?

How much should it cost to transfer my property to an LLC?

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