Anyone have experiencing using a quit claim in Chicago?

Question

My lender suggested moving a multi-family from my personal name to an LLC immediately post-closing via quit claim deed. Does anyone have experience with this (even better if in Chicago)?

According to the City of Chicago tax code, it costs $5.25 per $500 of the transfer price. At property value of $800k (my budget), the transfer tax will be $8400 alone. Adding in county and state tax, record fees, legal fees, etc., I estimate that this will cost over $10k.

My assumption is that it still will be better to purchase in my name (better loan terms, ability to put 20% or less down, and I'm already pre-approved) and move to an LLC, but this seems like a steep cost of doing business. Is there anything I'm missing?

John Warren · Answer

@Adam F. your real estate attorney should be able to tell you exactly how much this costs. I am sure it is not anywhere near that expensive. I think the charge is fairly nominal from what I have seen. Any competent real estate attorney can take care of this for you.

Martin Nesta · Answer

Great thank you very much.

John Warren · Answer

@Martin Nesta this is super simple to do. I can PM you an attorney I have used for this.

Martin Nesta · Answer

Same situation here I need to deed a condo to my LLC. Can anybody help me with some attorneys for this? Thank you.

Jonathan Klemm · Answer

Hey @Adam F. - You've got some pretty solid information above and concurrence that it shouldn't cost nearly as much as you thought, but on a separate note, I'd like to understand your situation a bit better.

You are currently just looking for a Chicago property to purchase and asking the quit claim question in preparation for closing?  When you say multi-family, are you thinking of buying a 2-4 unit?

Also, do you have any other properties or assets?  I only ask because the main purpose of an LLC is legal protection, and if you don't have a large amount of assets to protect, say less than $1M...you may be putting the cart before the house, and it may make more sense for you to focus more on finding and closing more deals.

John Warren · Answer

@Adam F. I can send you a solid attorney if you need one. You could probably get a half dozen from the other posters here like Tom. Let us know if you need an intro.

Paul De Luca · Answer

I was talking to my attorney the other day about this and he quoted me $500 to prepare and record a quit claim deed. He didn't mention anything about the transfer tax.

Jack Matthias · Answer

If no consideration is being exchanged, then all you would need is exempt stamps for State and county.

Chicago would also require a $0 exempt stamp,

Just a FYI, Any deed recorded in Chicago will require a City of Chicago water cert.

Directly from my title guy.

But like John said your attorney should be able to tell you exactly.

Tom Shallcross · Answer

@Adam F. - feel free to reach out if you need local attorneys. I'm not sure of the exact dollar amount, but I believe if the grantee quick claims the deed for under that amount you avoid the transfer tax. So you quick claim it from your name to the LLC for $10 and avoid the transfer tax. We've done this multiple times and it should not be a costly endeavor.

Now the other consideration is your lender. You are technically going to be out of compliant with them. Many people do this and as long as they keep paying the lender nothing happens, but just understand your risks as they may be able to call the loan for whatever reason. Again I am not an attorney, but you should speak with one on this.

Adam F. · Answer

Other than an intro call, I haven't started working with my lawyer, so that's why I haven't asked him. But I should just reach out. Thanks John.

Anyone have experiencing using a quit claim in Chicago?

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