Quitclaim to LLC?

[Andrew Slezak]

Hey yall,

my wife and I started off in real estate as house hacking. My first property was a duplex, and then a year or so later she bought her house, and we moved in together living in MIL suite basement and rented out the rest of the house. We have since relocated and the properties are strictly used for rental. We created an LLC because it seemed like the right thing to do and we're looking to grow our rental portfolio now. I'd like to transfer the properties under the LLC now.

Do I go about doing this by performing a Quit Claim Deed? If so, am I selling/transferring the title or am I just adding the entity to the title?

Thank you in advance

[Savannah Wallace]

Depending on the type of mortgage on the property, if you're looking at moving the properties out of your name and into LLCs, then you may benefit from a land trust,t which is a revocable grantor trust. Depending on the terms of the mortgage, transferring the property to an LLC may be considered a sale, thus triggering the due-on-sale clause. However, putting it into a land trust first avoids triggering the due-on-sale clause. Under the Garn-St. Germaine Act transfers into grantor revocable trusts are exempt transfers and will not trigger the due-on-sale clause. The beneficial interest of that trust would then be assigned to the LLC so that you enjoy the asset protection benefits of the entity.

To whichever entity you move the property to, it will be a transfer, you aren't just adding the entity to the deed. I recommend warranty deeds over quitclaim deeds. Quitclaim deeds simply transfer interest without investigating or guaranteeing title validity, which can lead to complications if ownership disputes or liens exist. Warranty deeds provide greater protection from potential legal and financial risks associated with unclear titles. Even though it's going from your name to your entity, I would still recommend using a warranty deed. 


Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.