Transferring mortgage to LLC

[Hannah C Christie]

Bought the house in 2020 and have lived in since. Up to date on payments. Have lived in house since 2020. Conventional fixed rate mortgage which was sold to Fannie Mae shortly after originating. Wanting to turn into rental property. Have formed LLC and submitted everything to Fannie Mae to have the LLC become the holder of the mortgage. I am the sole member of the LLC. I am getting nervous now that I am not able to transfer the mortgage to the LLC or if I do, I will trigger a due on sale clause? Has anyone successfully transferred their mortgage out of their name and into the name of an LLC that they are the only member of?

[Nathan Gesner]

You work in healthcare and are easy to find? What do you think is going to happen? The Tenant will discover who you are and then sue you for . . . what, exactly?

Even if they do sue, they have to win.

Even if they do win, insurance will cover it.

They have to win a judgment so large that insurance will not cover it. Why do you think insurance provides $300,000 - $500,000 in liability? Because they know that's enough to cover 99.9999% of all lawsuits. Most Landlords are sued over security deposit disputes, small enough to be handled by small claims court. If you had a large lawsuit for health issues from mold or a fall down some rickety steps with no handrail, you may be looking at hundreds of thousands but the vast majority of those are settled out of court for well below your liability limit.

This idea that Tenants are suing Landlords every day (and winning) is ludicrous. The best way to protect yourself is to obey the law and treat your tenants honestly and fairly.

Call your lender and ask them if you can transfer the property to an LLC. If they say it's OK, ask them to put it in writing and move forward. It's that easy.