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

[Rob Tara]

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?

[Don Konipol]

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.