I had an IN property tied to KY LLC, So the renter did all of the lease and paper work with KY LLC. Recently I moved the said property from KY LLC to IN LLC and I still have 3 months left on the current lease. I am thinking instead of making the tenant sign all of the paper with new LLC for next three months, I should make her sign an addendum that states - She acknowledges that original lease was signed with KY LLC ( of course we will insert the real LLC name) and now the property is under new LLC.. so nothing changes, all contracts , obligation stays the same as with the old LLC.
Two questions:
1. Am I thinking about it right way? or making it too complicated. or just wait till the lease ends. I probably will not renew with this person.
2. If I am thinking about right, do we have any expert who can give some guidance/ sample on language to be used?
@Damini Dutta, you simply assign the lease to the new LLC and notify the tenant of the change. Same process anytime you sell a house that is leased out.
Most good leases have language at the end and a space to sign over the lease to a new owner. The you just give the tenant notification of the change along with any changes in contact info, how to make payments etc.
I'm curious why you moved the property from one LLC to another. In my state that would be an expensive change as I would be paying state transfer tax on the move along with other costs plus I would need to consider whether I wanted to buy title insurance on the property for the new LLC.
How do you assign the lease to new LLC? what language would you use?
To your questions - I moved the property because it was by mistake aligned with Kentucky LLC, where as the property is in Indiana. As you know LLC protection is at state level so really it was wrong to start with.
I am the sole member of the LLC and the mistake was caught less than year ago so there are no capital gains or anything so I was told it is a streamline process. Now you did bring the title insurance tied to the old LLC. I think that is a good point that I will need to ask my attorney.
How do you assign the lease to new LLC? what language would you use?
To your questions - I moved the property because it was by mistake aligned with Kentucky LLC, where as the property is in Indiana. As you know LLC protection is at state level so really it was wrong to start with.
I am the sole member of the LLC and the mistake was caught less than year ago so there are no capital gains or anything so I was told it is a streamline process. Now you did bring the title insurance tied to the old LLC. I think that is a good point that I will need to ask my attorney.
The tax I was talking about are a sales tax paid on properties being sold/transferred. In my state that is standard but I'm sure other states vary. I think in some states that may be referred to as "tax stamps".
Your lease is already done. So, you can't add that language to the existing lease now anyways. So, you need to talk to a lawyer. They probably need to draft a separate document to assign that existing lease now.