Residential Real Estate & LLC's Don't Seem to Mix.

[Tyson Cox]

I know the topic of LLC or not has been discussed more times than I can count here a BP, so I hope this discussions does not become a debate of whether or not rental property should be held in an LLC. My particular question is:

Is there a way to put residential real estate (1-4 units) into an entity without quit claiming and triggering a "due on sale" clause or refinancing into more expensive commercial and/or portfolio loans?

My attorney has advised that I leave my properties (several 4plexes and duplexes) in my personal name as long as I have a good general liability insurance and umbrella policy (which is already in place).

I am okay leaving things as they are, but I am just wondering if I am missing something as many folks on BP don't seem to have an issue with this.

Please let me know your thoughts. Thanks in advance.

[Bryan O.]

Check with your lender. Acceleration is something the lender does, so they are the ones to talk to. Check your loan. I just pulled up one of mine and it specifies: "Even if you sell your home by letting an approved purchaser (that is, a creditworthy owner-occupant) assume your mortgage, you are still liable for the mortgage debt unless you obtain a release from Iiability from your mortgage lender."

If you are the current owner, and you provide evidence (Operating Agreement, etc.) that you are the only owner in the LLC, they may be willing to let you. Ultimately, it's up to them so you should check with them.