LLC on Title of your Real Estate?

Question

Hi there,

I am house hacking my first property and I close next week! I am curious about the pros and cons of holding title to your real estate under a single member LLC?

My initial thoughts are:

• Will this affect my mortgage? (I have a primary residence loan)
• Will this affect my insurance?
• How long after closing should I wait to quit claim the title to an LLC?
• Is there more protection owning Real Estate in an LLC versus your individual name?

What are your thoughts?! Thanks :)

Cate McConnell · Answer

Hi Toni,

Congratulations on your first property! So, have you asked your lender about this? No lender I have spoken to will allow an LLC to hold title to residential real estate. And quit claiming your deed over to an LLC post-closing could trigger the mortgage to be owed in full since you are changing ownership without the lender's agreement. I know they say everyone does it, but do you really want to lie to your lender and risk the consequences?

Of course, if you are obtaining a commercial loan for the property then you can title it to your LLC, but you will still be personally liable for the loan. Discuss all of this with your lender, and probably an RE attorney.

This question has come up on BP Forums before so search for your question and gather in the wisdom. :)