Credit Union says I cant transfer to LLC unless the LLC qualifies?

[Zack Kolb]

Hello all,

Thanks a lot to the BP community, I am about to rent out my first property. I have learned a bunch here, and continue to do so, so thanks to all who contribute. Its not rented yet, but I met with a lawyer today to get questions answered and an LLC setup properly.

I called my credit union today, just to be safe, to see if transferring the property from my personal name (I have lived in this property for 3 years now, as my personal residence) to an LLC will trigger a due-on-sale clause. The nice customer service representative I spoke with on the phone did not know the answer to this question, and put me on hold to ask someone who knows the answer to this question. He returned, saying something to the effect of, "Sorry, we cant allow a transfer like this unless the LLC itself qualifies." In the past, I have shot this question at my loan officer and he seemed to think it would be fine to transfer, although he told me he was not 100% certain. I also called and left messages with 2 other contacts I have at the credit union to make sure what I was told is correct.

I assume my brand new LLC would not qualify for the loan? Or would it? Have any of you run into this before? Do credit unions have this rule? And if so, what do you do? Just move forward, without the LLC, and carry the umbrella policy?

Thanks all.

P.S. I have read many times the pros/cons of LLC vs umbrella, I know an LLC is not a must, and I know there are other options I can still use. I am letting you know this so this thread doesn't turn into an LLC vs umbrella war.