Title Transfer into LLC Question

[Chukwudi Motanya]

Hello BiggerPockets,

Hope all is well. I have a quick question on Title Transfer. Currently I have 3 properties, but they are under my name. I created an LLC and I want to transfer the properties over. I understand there is the possibility of triggering a due on sale clause. My question is, how do I find out if this would be applicable to my scenario? How do I know if I am susceptible to the due on sale clause?

And if I am, is there anyway I can negotiate to the bank to mitigate this? Possibly place a PG on the LLC to ease their worries?

Thanks Bigger Pockets

[Edward B.]

@Adam Laczo, I had a loan originator call the Fannie or Freddie (can't remember which) hotline for underwriters and ask. After getting past the fact that he was not an underwriter his conclusion from speaking to them is that it is not actually the agency's rule but rather a lender overlay. I honestly don't know if that is true or not. It is impossible to get a straight answer from gov't orgs.

Regardless, if the language is in your mortgage/DIT docs then whoever owns your loan can enforce the clause if they choose. If the language is in there, there is no way to get around it. You can roll the dice and transfer it anyway, you can hide what you are doing in a land trust, you could refi in the name of the LLC, etc, etc. But if you transfer the beneficial interest in the property you will likely violate the clause if it is in there, which it is in almost any loan written recently.