Quitclaim Deed to an LLC

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Quitclaim Deed to an LLC

Ron Averill
Investor · East Lansing, MI · Member since 2014 · 82 posts · 43 votes

I've seen some discussions on BP regarding the topic of QuitClaim Deeds (QCD), but I'd like to get more personal opinions and legal opinions from the experts here.

Background: I started a new LLC, within which I plan to buy and hold properties. This is primarily for liability protection. I have not bought my first property yet, but plan to do so in the next month or so.

Situation: Most banks have different terms for commercial loans (e.g., to LLC's) than for residential mortgages. I have found some banks that will offer residential mortgage terms for rental properties as long as I purchase the properties in my name (not in an LLC).

Question: It was recommended to me that I purchase the property in my name and then QCD the property to the LLC. This seems a bit questionable to me, though apparently it is very common. Do you recommend this? Can you provide some insight and legal advice on this practice? What are the ramifications? And do the laws regarding this vary from state to state?

Many thanks,

Ron

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Account Closed
Real Estate Investor · Chicago, IL · Member since 2008 · 1k+ posts · 218 votes
12y

@Account Closed LLCs only don't protect if the people don't keep the paperwork correct. Maintaining your records, operating agreement, keeping the funds separate,etc Treating it like a business.

To not have insurance would be foolish as well, but not putting a property in an entity is a rookie/amateur move.

LLC's are powerful if handled correctly

Disclaimer: I am not an attorney, just an investor with several LLCs that have all stood up in court protecting me.

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  • Account Closed
    Real Estate Investor · Chicago, IL · Member since 2008 · 1k+ posts · 218 votes
    12y

    @Ron Averill

    I just posted about this. I am going to ask if you feel the mortgage person that told you to do this has a law degree? Probably not. This isn't a hobby, it is a business

    1. Liability is a wreck when you have a lien with your name against the title in the LLC

    2. You max out the number of NOO loans you can have in your own personal name

    3. Mortgage brokers don't get it that say this!

    Treat this as a business. Get a commercial lender. Tell this broker that he just gave legal advice and could get in a world of trouble for it, then never ever do business with them.

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  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    You should get a good insurance policy. Doing a QCD to an LLC is only covering it up but does not change that it was finance in your name. It is a shame most new comers will fall for the LLC hype.


    Joe Gore

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  • Ron Averill
    OP
    Investor · East Lansing, MI · Member since 2014 · 82 posts · 43 votes
    12y

    Thanks Ryan. Your advice lines up with my gut reaction on this topic.

    Ron

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  • Ron Averill
    OP
    Investor · East Lansing, MI · Member since 2014 · 82 posts · 43 votes
    12y

    Joe,

    It sounds like you are not a fan of LLC's. Did I misunderstand your comment?

    Ron

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @? quit claims only release an interest in title. IN a lot of states they will bugger up title and that transfer is not insurable. In other states like MS its the preferred method.

    Lets say you did a quit claim and wrote it in pen here in Oregon like you were buying a property from someone.. YOu would play hell trying to get title insurance on the resale.

    Most of my commercial loans are the opposite loan to LLC with PG's. But my lender will lend to my name as well. Just depends on if its a stand alone loan or a credit facility in the name of that particular LLC

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  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    @Ron Averill,

    You are correct. LLCs do not protect you like everyone say they do but a good insurance policy will protect you.


    Joe Gore

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Account Closed concur one should have both it really comes down to the reality of the situation.. For those starting out buy their cash flow rental and they really have no equity or net worth asset protection is a waste of money a small 100 a year umbrella policy will work.. Who is going to pay thousands to litigate a claim on a 30k low end rental?

    One these folks get going and have something to protect then they should spend the money on these things.. their funds would be better served used to find and close their deals

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  • Account Closed
    Real Estate Investor · Chicago, IL · Member since 2008 · 1k+ posts · 218 votes
    12y

    @Account Closed LLCs only don't protect if the people don't keep the paperwork correct. Maintaining your records, operating agreement, keeping the funds separate,etc Treating it like a business.

    To not have insurance would be foolish as well, but not putting a property in an entity is a rookie/amateur move.

    LLC's are powerful if handled correctly

    Disclaimer: I am not an attorney, just an investor with several LLCs that have all stood up in court protecting me.

    1Reply
  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    @***********,

    Are you saying someone have sued all your LLC's?

    Joe Gore

    0Reply
  • Ron Averill
    OP
    Investor · East Lansing, MI · Member since 2014 · 82 posts · 43 votes
    12y

    Thanks everyone. This is exactly the kind of information and discussion I was hoping for.

    I was planning to do everything inside an LLC and carry an umbrella policy. Now I definitely will follow through with that plan.

    I guess my next step is to find a good commercial lender in my area.

    Ron

    1Reply
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