Conventional loan and then transfer to a multi member LLC

[Ahmed Iqbal]

Hi All:

My sincere apologies if this topic has been answered before. I did search and could not find the exact answer. My scenario is this I am exploring a new market and putting together a 3 member partnership. The out of state lender, I am working with, told me that if I obtain a conventional loan then transfer the property to multi-member LLC at a later point, that might violate the ownership stipulation that was made at the time of the loan origination. Their point is that having someone else besides a spouse in the LLC opens legal questions. One posting that I saw is that as long as the loan originator is the majority owner, it should be fine, but in our case partnership, splitting three ways, that would hardly be the case. Also, the partner, who is the boot on the ground, will be managing partner for us. I am seeking to draw on your experience, on any additional thoughts. The state that we are exploring is Iowa.

Ahmed