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Updated 8 months ago, 03/21/2024

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2
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Na Meriel
1
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2
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Complex property transfer to LLC with private mortgage; do I need a title company

Na Meriel
Posted

Hello everyone--

I bought a house in Virginia in cash jointly with my son 5 years ago. He lived in it for 3 years while attending college, and now I am considering transferring it into an LLC. The property has appreciated in value by about $100k. I have also gifted a percentage of the house to him each year, so that he now has a larger ownership %. My son moved out 2 years ago, and I am trying to take advantage of the capital gains exclusion. I am also looking for asset protection. My daughter will be attending the same college next year, and it will be rented for the next 1+ years until she can live there. I created a VA LLC with my daughter as the owner (for my anonymity and asset protection), and was planning to hold private mortgages (using another LLC I created), to strip equity and for anonymity.

I contacted a title company to officially record the sale, but they are requiring 3 separate closings (and tons of extra fees) because there will be 3 liens/private mortgages recorded (one is the original mortgage that I want to reassign since the interest rate was very low; the second will be held by my son to my daughter for his portion of the equity in the home; and the third is the difference which will be between my daughter and my other LLC). My questions are:

1.  Do I need a title company at all?  If so, can I just have them record a single sale, and then file the deeds of trusts as liens at the courthouse on my own to save all the fees later?  I do want title insurance, and doubt it will transfer, since my daughter was not on the original deed when the home was purchased. 

2. Should I just forget the LLC altogether and "sell" the property to my daughter, so she might be able to take advantage of any future capital gains taxes? (Plus I have 529 money I can use to pay the mortgage) If I do this, do I need to go through a title company for title insurance?

3.  I am assuming a warranty deed is the best option over a quit claim, esp since I already filed two quit claims (The first was to change the tenancy from joint to tenancy in common; and the second was to add my daughter as a tenant in common).

My situation is pretty complex...or maybe I'm just making it too complex--I'd love any input anyone might have!

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