Seasoning period if deeding property from my sole member LLC to my wife

[Allen L.]

Hi,

I want to put a couple of rental properties that is currently owned under my sole member LLC into her name and then getting 30 year fixed conventional loan on them. These properties currently have 20 year commercial loans. If the LLC QCD them to her, does the 6 months seasoning on cash out refinance still apply? Would love to connect with a conventional lender that can work with this if no seasoning is required.

[Patrick Roberts]

Most likely, yes, the seasoning rules will apply. Conventional (Freddie) allows for an exception to seasoning when a property is moved from an LLC to an individual's name if the borrower was the sole owner or had majority ownership of the LLC for 6 months (the seasoning period). In this case, because your wife is not a member of the LLC with majority control, this will be likely be an issue.

You could possibly set this up as a non-arms length purchase by your wife from the LLC, but you'll want to have an in-depth conversion and be very clear about the plan with your lender. A lot of lenders have overlays preventing this kind of thing because of the buyback risk. I would probably ask that the lender have underwriting scrub the deal prior to the transfer.

Will you not be on title/a borrower on the new loan?