Originally posted by @Dzenan Catic:
@Clint Coons
This is the response I got from the banks title team. Does this mean that I would be okay? I asked if the quit claim deed would cause my title policy to be void:
"No. If the owner quitclaims the property into an LLC that is wholly-owned by the owner then the title policy continues
in full force and a Form 107.9 endorsement is not required.
If, however, the owner quitclaims the property into an LLC that is not wholly-owned by the owner, then a Form 107.9 endorsement would be required to name an additional insured. NOTE: A similar result will occur when dealing with a corporation. If the stock, shares, memberships, or other equity interests are wholly owned by the owner of the property
then the title policy continues in full force and a Form 107.9 endorsement is not required. If, however, the owner quitclaims the property into a corporation where its stock, shares, memberships, or other equity interests are not wholly-owned by the owner, then a Form 107.9 endorsement would be required to name an additional insured.”
Here's an extended post I've made other forums that you may want to also consider and want to research;
Regarding the transfer of a property to and LLC; The lender can exercise the "due on sale" clause if the name(s) of the buyer are not the same name(s) as the members identified as the owners of the LLC. For clarity; as with a trust, lenders do not exercise the "due on transfer/sale" clause when real property is transferred to the SAME individuals in an official capacity (e.g. Joe and Jane Smith as trustees of Smith Trust). Typically, the same applies to LLCs where you and your spouse are sole members (single or multiple member LLC).
If you take out a mortgage personally and transfer the property to your LLC that you control, you should be exempt. Also, if your loan was conventional; Fannie Mae recognizes the legitimacy of a QC between the mortgage holders and the LLC so long as the LLC is controlled by the borrowers;
If the property was owned prior to closing by a limited liability corporation (LLC) that is majority-owned or controlled by the borrower(s), the time it was held by the LLC may be counted towards meeting the borrower’s six-month ownership requirement. (In order to close the refinance transaction, ownership must be transferred out of the LLC and into the name of the individual borrower(s). See for additional details.)
I believe Freddie Mac follows suit. Here’s a BP post on the same topic;
Regardless, you should always talk to your lender and tell them exactly what you’re planning and get their approval.
Next is to check with the Title Company regarding the Title insurance. Generally, the coverage of the Title Company policy will state; “The coverage of this policy shall continue in force as of Date of Policy in favor of an Insured after acquisition of the Title by an Insured or after conveyance by an Insured, but only so long as the Insured retains an estate or interest in the Land, or holds an obligation secured by a purchase money Mortgage given by a purchaser from the Insured, or only so long as the Insured shall have liability by reason of warranties in any transfer or conveyance of the Title.” However, its best to ask your Title company if the insurance coverage remains intact if the asset is transferred.
I am not a lawyer and this is not professional advice.
