Quit Claim deed property to LLC / Asset protection / Due on Sales...

[Paulina Purnama]

Hi Guys,

I've been reading many posts on LLC's, quit claim deeds and such and I have been getting very confused with a lot of the things out there. I know there are hundreds of posts on this topic and I have read many of them. I still am still confused about the best option for me at this point. I have a situation that I need some help with...

My partner (brother in law) and I were planning to purchase out of state properties as buy and hold rentals (all residential with less than 4 units). We set up a LLC in the state in which we intend to purchase. We talked to many banks about loans but the issue was no bank would lend to us in the name of the LLC.

We then decided to each buy a property under our personal names using our personal credit. We used conventional financing with 25% down as non owner occupied investment properties. We now intend on quit claim deeding the title over to the LLC. I know there are strong reservations against that due to the "due on sales" clause being violated. Is there any other option or way around this? I have heard a lot about land trusts but again these are from gurus trying to sell things. I've read the numerous posts and blogs about this but still can't come to a conclusion if it would be viable option or not. I've called many attorneys and most just tell me to keep the property in my name, get insurance and be done. No one has suggested a land trust since they say that because I have a mortgage my name will still be public record.

The other issue is that I am a high net worth physician and asset protection is also very important to me since I will be a target for law suits if the properties remain under my personal name. We already have a commercial insurance policy in place with 2/4MM liability but still would like to have the protection of the LLC, as well as build credit in the LLC to be able to buy future properties in the LLC name.

I've been struggling with this for a while and still don't understand the best way to move forward. I know the best thing would have been to obtain a loan via the LLC and title directly to the LLC name but even if I would be able to find someone to loan to a new LLC (with my personal guarantee) it would likely only be a variable rate loan with much higher interest rates.

At this point am I stuck having this property under my name or should I just take a chance and quit claim to our LLC and hope the bank doesn't call the loan. If they do I can always title it back??

Or, just keep it in my name, buy more insurance, set up a general partnership with my brother in law and pray no one looks up who owns the property and notices I'm a physician.

BTW, we are purchasing duplexes in nice areas that are professionally managed. These are not $500 section 8 type units.

Any input on the matter would be greatly appreciated! 

I just can't seem to get a straight answer from anyone. I've reached out to attorneys as well as CPA's and get mixed suggestions.