Changing Title from Personal Name to LLC in Texas….Options to Avoid Loan Acceleratio

San Antonio, Texas
Legal & Legislation
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Changing Title from Personal Name to LLC in Texas….Options to Avoid Loan Acceleratio

Rob TaraPro Member
Member since 2024 · 11 posts · 8 votes
Hi all, I bought a single-family rental in Texas under my personal name with a conventional (non-FHA/VA) loan. I now want to transfer title to an existing Texas LLC I already own, but my lender said that if I transfer title they’ll invoke the due-on-sale clause and demand payoff. Looking for practical experience and legal/structural suggestions from Texas investors. Facts: • Loan = conventional, in my personal name. • Property = (single family rental / state TX). • LLC = already formed and in good standing. • Goal = move ownership to LLC for asset protection and simplified management. Questions for this group: 1. Anyone in Texas successfully get a conventional lender to allow a title transfer to an existing LLC? What did the lender require? (paperwork/fee/personal guarantee) 2. Anyone refinanced into an LLC? What were the costs/terms and did the lender require a personal guarantee? 3. If you used a “subject-to” transfer, did you ever face lender pushback? Any best practices to minimize detection/enforcement risk?
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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
10mo
Quote from @Chris Seveney:
Moving into your LLC does zero for asset protection. You can check the other 10,000 posts I’ve done on this.

 Chris, I have to disagree with you on this point (again, LOL).   Holding any asset in an entity as opposed to personally MAY limit potential liability solely to that entity and not expose other personal assets.  I owned a condo that flooded and the offices below suffered extensive damage.  While insurance companies fought to deny all claims, my personal assets were never threatened; as a result while my remote entity was sued, I personally was never sued.  That alone is well worth the protection.  Eventually, my insurance do as well as the condo association insurance co reached a settlement.  What complicated matters was that as a term of lease the condo association required the business renting the office below my condo to maintain renters insurance, which they did not.  

I can tell you that having liability limited to an entity with a single asset rather than me personally not only place me in a stronger negotiating position but also resulted in a much less feeling of vulnerability for myself.  

Private Mortgage Financing Partners, LLC
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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    11mo
    Moving into your LLC does zero for asset protection. You can check the other 10,000 posts I’ve done on this.
    7e investments53 Reviews
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    • Rob TaraPro Member
      OP
      Member since 2024 · 11 posts · 8 votes
      10mo

      @Chris Seveney thanks for your response. Let me add an additional piece of info:

      - the LLC is owned by my family trust. I want to ensure all is within the trust, in case I pass.

      0Reply
    • Don KonipolBusiness Member
      Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
      10mo
      Quote from @Chris Seveney:
      Moving into your LLC does zero for asset protection. You can check the other 10,000 posts I’ve done on this.

       Chris, I have to disagree with you on this point (again, LOL).   Holding any asset in an entity as opposed to personally MAY limit potential liability solely to that entity and not expose other personal assets.  I owned a condo that flooded and the offices below suffered extensive damage.  While insurance companies fought to deny all claims, my personal assets were never threatened; as a result while my remote entity was sued, I personally was never sued.  That alone is well worth the protection.  Eventually, my insurance do as well as the condo association insurance co reached a settlement.  What complicated matters was that as a term of lease the condo association required the business renting the office below my condo to maintain renters insurance, which they did not.  

      I can tell you that having liability limited to an entity with a single asset rather than me personally not only place me in a stronger negotiating position but also resulted in a much less feeling of vulnerability for myself.  

      Private Mortgage Financing Partners, LLC
      WebsiteView Page
      1Reply
  • Alyssa MarquezBusiness Member
    Real Estate Agent · San Antonio TX / Fort Lauderdale, FL · Member since 2023 · 117 posts · 26 votes
    1mo

    This is indeed a delicate area. Given the loan confirms the lender would exercise their due-on-sale clause, I would be hesitant to convey title until I received written consent from the lender to do so. Refinancing into the LLC could be the 'cleanest' way, but I would do the math – new rate, closing costs and loan terms compared with the perceived liability shield.

    I would also consult a Texas real estate lawyer for alternative asset protection methods.

    Does any one know of lenders that have worked with borrowers willing to exercise due-on-sale with refinance into title holding company or similar vehicle, after approval.

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