Include partner’s name on title?

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Transferring a property from a personal mortgage to an LLC can violate the terms of the agreement and cause the Due on Sale clause into effect. That transfer can also invalidate the title insurance. So ask your lender and your title company if that will happen in your situation. Best to know in advance.I would set up a Joint Venture (not a partnership) with each of you participating as a member of the Venture. In Joint Ventures, I always set it up 50/50 for cash flow and equity split with a 51/49 ownership split. Someone has to be able to make the tough decisions when the time comes. I'd also set it up so that each side can buy out the other, heirs can buy out the other if one of you is no longer able to function, I would definitely identify the workload split (mine has a Capital Investor who provides all Capital & a Managing Investor who has all of the day to day responsibility for the property.)Make sure each of you provide monthly reports to the other of what has gone on with your side of the Joint Venture.Have a clause for how long the property is to be held, what it is to be used for and how it will eventually be disposed of. By the way, for your LLC, make sure you have an attorney draw it up and include an Operating Agreement. Follow the operating agreement or your LLC is worthless. People who do a an LLC online without an operating agreement likely won't survive a lawsuit if one is ever cast their direction. It is good to have an LLC so you can open a business account and things like that. But without 1. An Operating Agreement 2. Following the agreement in detail - the LLC provides little protection when you really need it. If you are not good at following details, like an Operating Agreement, use umbrella insurance for that protection. You are running a business.

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OK Account Closed, you are right. I looked it up. https://www.stimmel-law.com/en... Yes technically there is a difference between a partnership and a Joint venture. However for practical purposes there is no real difference regarding liability and taxation. (Unless and LLC or other entity is formed.)Can you explain why you suggest a Joint venture not a partnership? Thanks

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@Austin Lohr I suggest you talk to an attorney. While you should probably also talk to an accountant as @Melinda McDonald said, they do different things. You have issues that are both legal and tax issues. You need to talk to both. Keep in mind they may recommend different things as they are both looking out for your interests but from a different perspective. One minor correction to what Account Closed said, legally a joint venture is a partnership.

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Sure, a Partnership is more paperwork, requires a lawyer's intervention, regulated by the government, must maintain a separate set of books, partners can't be in a competing business, is intended to be a long term concern, profit is distributed annually. A Joint Venture can be a flip (very short term), each member keeps his own set of books, no governing authority so no regulation, profit or loss is determined at the end of the venture, (once the property sells), there isn't an assumption of ongoing participation past the current project, (so, if the deal turns sour you have no obligation to do a second one), You can use Joint Ventures for many, many things. Here is a sample of mine that I use when working with a Capital Investor and I'm running the Procurement, rehab and sale of a property. It is 10 pages long and is notarized by both parties. (I left Section 2 out since it is proprietary information) But, you get the idea. And on it goes to outline in clarity each other's roles, how the project will be run, when the project will sell the property, what happens if there is a diasagreement on an issue and so on. For anyone who may read this in the future, you can click on the images to enlarge them. But, you already knew that right? ;-)

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@Austin Lohr first thing to understand is the loan doesn't transfer when you deed ownership to the title. The loan stays with the person who took the loan until it is paid off, so the only way to move that is refinancing. If you buy the property in your personal name, with a personal loan, you can generally deed it to an LLC later. They require the LLC majority owner to be the same as the person who owned it personally. In other words, you would have to own 51% of the LLC. As far as the loan, that does not transfer to the LLC. The loan would stay in your personal name, so you would be responsible for 100% of repayment. Your partner could own up to 49% of the property but the LLC would have no loan liability. The LLC can pay your personal loan, but in event of default, it comes back to you.The only way to get the loan into the LLC name would be a commercial loan taken out by the LLC. For a new LLC that may require one or both of you to personally cosign for the loan.

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1) Do you have a formal Partnership Agreement? If not, what happens if one of you dies? Does the survivor get everything or does the other party's ownership go to relatives who may not be "nice"?2) Please understand you CANNOT transfer a mortgage to an LLC. Only ownership of the property.3) As @Mike Hern pointed out, an ownership transfer may violate the due on sale clause of the mortgage. FNMA now allows a transfer to a single-member LLC, but not partnerships. Check with a real estate legal professional. 4) A transfer to a single-member LLC is typically not a taxable event, but to a partnership entity it may be. Check with a real estate tax professional. 5) For splits, go for as much as you can get! Do try to be fair though:)

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In a partnership, as an example, one member can be sued for the actions of the other partner's children. For instance, if a partner let's his kid drive his car and the kid gets into an accident and seriously injures someone, both partners can be sued. Each of them are acting as agents of the partnership. In a Joint Venture however, each member is acting as their own agent and the court will recognize that there is a wall of protection from one member's actions to the other. And there are several other serious differences. They are not the same as far as the law is concerned. "Liability Issues In a partnership, all members are jointly and severally liable for the debts and obligations of the entity. Individuals are accountable for their own actions, as well as the actions of the other members. A joint venture may be set up as a separate corporation or other limited liability company, which means participants are only liable to the extent of their investment in the company they create."

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@Austin LohrIf the property is owned as tenants in common, both owners should be on the title.Imagine you are the only one on title and you pass away and the property appreciated by $100,000.He would basically have no right to that appreciation.It also will help entitle your partner to the tax benefits of ownership.

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I think you need to ask your partner what (s)he wants to do keeping in mind that if you have a heart attack and die at the closing table after everything has been signed, what you planned to do later may not matter. Title is as it is. This isn't too far fetched a possibility. When I was doing underwriting I received a call from an attorney advising he was in a closing and the Seller had just died after signing the deed but before the Buyer had signed the mtg and needed to know if he could complete the closing. I advised I couldn't advise him on what to do other than he was not authorized to issue a title policy w/o a probate confirming the sale.

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You will want to have this conversation with him to make sure both parties are comfortable.