Looking to learn whether I could use a Quitclaim deed

[Dennis Santa Paula]

Hi, I'm looking to buy a fourplex near Tampa in Florida. I'm having hard time to find lenders that would lend to an LLC. My mortgage broker suggested me to take the loan and then do a quitclaim deed to the LLC. Can anyone please share any experience on doing this? Any suggestions? Thanks a lot

[Jeff Copeland]

You can do it. But just because you can, doesn't mean you should. 

Here are some potential issues:

• The deed itself. A warranty deed is generally always preferable to a quit claim deed. 
• Insurance coverage. If you transfer title to the property, you (as an individual) no longer own it and no longer have an insurable interest in the property. You must update your insurance coverage to reflect the new ownership (and the premiums typically go up). 
• Note also that your mortgage company will be a named insured on your insurance coverage, so if/when you do this, they will get notified that your personal insurance coverage is no longer in effect, which can trigger anything from expensive lender-placed insurance coverage to the due on sale clause in your mortgage. 
• The due on sale clause is the biggest risk. You are pledging your property as collateral for a loan, and your mortgage will state that if you sell or otherwise transfer title to the property, the mortgage balance becomes due in full. Mortgage companies don't always do this, but it happens often enough to warrant concern and have a Plan B. 

What is driving you to put the property in an LLC? Many investors ultimately decide that the benefits of conventional financing terms outweigh the liability risks (which are mitigated by liability insurance).