Transferring Personal Name to LLC

[Peter Hoang]

Hello everyone,

I tried searching the forum for this answer but had no luck. I just got my first property under contract today and plan on BRRRRing it. I have my LLC already set up and am getting rates from two lenders - one conventional loan (if I put it under my personal name) and one commercial loan (if I put it under LLC). I am currently waiting to hear back my offered rates.

My question is if I go with the conventional loan and have the property under my name, can I simply just transfer the deed over to my LLC and still keep the mortgage under my personal name? The loan officer said the mortgage company does not care who owns the property, they just care who is making payments on the loan. Apparently I don't even have to tell the company that I am transferring the title. He says mortgage company still keeps the lien on the house regardless if its me or my LLC who owns it.

The reason I am asking this is because I would like to finance the property under personal name (due to better rates) and then transfer deed over to LLC (for liability purposes).

Does anyone have experience with this situation and can verify if this is accurate?  Sounds too easy to be true. Thanks!!

[David M.]

@Peter Hoang

I post on this constantly...

My layman's opinion is do not buy personally then transfer to LLC. Other than the due on sale clause and Title insurnace isssues... your lender doesn't care about your corporate veil.. they just want to sell you a loan. really nobody cares about your veil other than you and hopefully your qualified attorney..

Co-mingling funds is an "instant death" to your corporate veil. So, if at the end of the day your LLC has Title but you have the mortgage, who makes the mortgage payments? You or your LLC? Who takes the deduction — don't care about federal irs position on disregarded entities since LLC's are State entities subject to a State law regarding their veils...

You want limited liability protection afforded by the LLC? You realize the LLC has to own the asset with the liability. Well, a mortgage is a liability....

Using your LLC as a alter-ego is another no-no. So, let's look at this with two complete strangers doing this deal. So, you think it's normal for say you to deed to me (or even my LLC if it makes you feel better) one of your properties... most people would expect me to make the mortgage payments (on YOUR mortgage)... look for tenants and rent out the property... pay all the expenses and buy property insurance... and hand over all the remaining rent... all of this without any paper signed between us... hmmmm.... oh, when it comes time to sell you get all the profits... hmmm...

No one has yet rebutted me.. I wish somebody would.. nobody has shared a court battle, regardless of whether their veil was deem secure or not... I know it's complicated for one because it's state specific and the legalities depend on your circumstances (eg I personally see this being "okay" if after many years you need to "convert" to a LLC structure, but then afterwards showed you only purchased via your LLC).

None of anything is fool proof. But, why go through the effort and expense to create a weak defense? If you want the asset /liability protection of the LLC, purchasing it upfront and using commercial financing is just part of the costs for it.

If you want to chat about, I’d be happy to. Feel free to direct message me.