Transferring Title from Own Name to LLC

[Joe Vastola]

I have read that there are a number of obstacles when buying a SFH under an LLC (i.e. having to use a commercial lender, higher interest rates, shorter amortization and balloon payment after 5 years). As a result, many books/podcasts suggest buying the property in my own name and then transferring the title to an LLC after the fact. This makes me skeptical because of the "due on sale" clause but from everything I have learned, it is unlikely that a lender will call a performing note. My questions are:

1- How long should I wait to establish the LLC and transfer title? Should it be immediate or do I need to wait to show the note is performing?

2- Are there transfer fees associated with this method? If so, how much and does that amount change based on how long I wait?

3- Would you recommend going this route, or would it be smarter to hold the SFH in my name and get an umbrella policy instead of the LLC?

[Tim Joyce]

My client was on the ball today, so here’s the recap (sanitized to protect confidentiality):
- lender said transfer would absolutely trigger the clause (not a surprise to me), and that they wouldn’t allow it (surprising to me that it was such a hard line)
- client’s contact at another lender said he sees this often, where folks risk the acceleration under the due on sale clause, a d transfer anyways, and the bank doesn’t find out
- this other contact said they just make people transfer back before allowing them to refi
- outcome is an hour of lawyer time to draft deed to transfer and LLC written action to accept the property, plus deed tax (negligible if your attorney does it right in Mm), and recording fee ($46 I think?)

So I stand corrected.