Lease Agreement With Tenant and a LLC

[Isha Suri]

Hello Everyone

I have to move out of my house due to job reasons. I am planning to rent my house. The house is on mine and my husband's name. I created a LLC with me being the only member on Sep 21st. I created the rental lease with my LLC and tenant on Sep 27th. I am planning to transfer my house to my LLC but it make take some days.

My question is that as the house is still under my and my husband's name and rental lease agreement is with tenant and LLC, so will my lease be still valid and legal??

Appreciate your reply.

Thank you

[Joshua Morgan]

I have a similar situation. You should talk to your own attorney, but my attorney told me this:

1) Although the property is owned in my personal name, I can still conduct business (lease agreements, etc) in the name of my LLC. Such formalities as a lease agreement between myself personally and my LLC are not needed. If youve already made lease agreements in LLC name, doesn't sound like you need to do anything additional.

2) Conducting lease agreements in the name of my LLC while owning the building personally still exposes me personally to potential liability. In my case, I don't have significant personal assets and have a strong insurance policy so this is not of major concern. To reduce/eliminate exposure of my personal assets, I would need to own the property in the LLC and conduct all business through the same. If you have the ability to move property into LLC, seems like that would be beneficial.

If you used something like Fannie Mae financing to purchase, however, and are going to transfer to LLC, keep in mind that to refinance using similar agency financing in a couple years, you might have to transfer *back* to your personal name. May not be worth the effort.

3) If your LLC is setup to be taxed as a disregarded entity, then there shouldn't be any concerns receiving rental income in either name - it should all flow through to your personal return either way.