Transfer to LLC [Prevent Liability] without "Due on Sale Clause"

[Inderpreet Singh]

I have a multifamily property that I closed - residential investment loan. 

My real estate planner suggested creating

1. Create a Limited Liability Corp [LLC in my state] and recording the deed into Commonwealth.
2. Since the property is under mortgage, just transferring to LLC will most likely trigger the "due on sale clause".
3. Add "Continuity of Obligation" between the note bearer [Me] and the mortgage company to prevent "Due on Sale Clause"

Suggestions?

[Bill B.]

Probably go with just an umbrella insurance policy. Because you state your goal is to prevent liability I don't think the LLC will do you any good. First. You are 10x more likely to be sued for something you do than the property is. In which case the LLC won't help because you own the LLC. In the rare case of the property causing the liability you are going to be sued personally as well. Even if you have a property manager the injured party is going to claim you knew about the situation or should have known, so you're equally responsible.

The call has gone out dozens of times for anyone on BP to tell a story about how having an LLC saved them. Nobody has ever responded. Especially in a case where an umbrella policy wouldn't have served the same purpose. I don't know how many BP members own properties but I would assume thousands of members own 10's of thousands of units.

Yes I understand people buying 50-100-500 unit buildings need corporate protection. Or those partnering, especially with strangers. But you said you got a residential loan, so this property is 4 units or less. 

Good luck either way.