Transfer loan to LLC

[Mario Lopez]

I currently have two residential loans in my name for investment properties and would like to transfer title to my LLC. I understand the due on sale clause exists but that it rarely ever gets called on.

Do you have tips on how to transfer title without triggering this? Is there a particular timeline I should wait to do it?

[David M.]

@Mario Lopez

https://www.biggerpockets.com/...

This unfortunately comes up too frequently.  The above is one of the threads where I've posted on this in longer detail...

To add to it, the Due on Sale clause is in my opinon the least of your worries.  Some attorneys haven't seen it in 40 years, some have seen it a handful of times in 40 years.  Besides, if it gets called, refinance...  no big deal.

The greater issue is protecting your corporate veil which I wrote in length in the above linked thread. Remember, the lender really doesn't have a responsibilty to you to preserve your LLC's corporate veil, they just want to sell you a loan. Most lenders aren't both residential and commercial lenders, especially not the larger companies. Legal entities are not eligble for conforming residential loans. So you have to get a commercial loan --- that's just part of the expense of having the LLC and trying to garner its benefits.

"Franksteining" your asset with Title in the LLC's name but mortgage in your name in my layman's opinion is not the way to go. The LLC only provides legal limited liability to what it holds. Since the mortgage was given by you, it won't fall under the LLC's "umbrella."

Consult a qualified professional, or two.  Work with the appropriate lender for your situation, a commercial (or really non-residential) lender.  Good luck.