Issue Transferring a Rental Property to our LLC

[Ryan Hansen]

Hi Everyone,

We have been planning to move the ownership of our rental property into our LLC for tax reasons and to protect our personal assets. However, our lawyer has informed us that it could be problematic because transferring a mortgaged property to an LLC can trigger a "due on sale" clause in the mortgage documents, which basically states that if the property is transferred the lender can deem that a default, which is an event that allows the lender to call the mortgage (i.e., require it be paid off in 30 days).

Has anyone else come across this issue in NY State? I thought having a rental property owned by an LLC was fairly common for investors. Any advice would be helpful.

Thanks!

Ryan