All Forum Posts by: Matthew McNeil

If I sought you out for legal advice, I would hope that one of the first questions you'd ask me is what my risk tolerance is before you told me that you disagree. LLCs are not fluid, but the choice to transfer your assets into an LLC are. Meaning, there are a few variables that would determine if an LLC is the best for a particular individual considering for example his net worth or his LTV, which no one is mentioning in these comments. Putting all of your properties into one LLC makes no sense unless its a series-LLC, but those aren't available in all states. Agreed, there are sweeping generalizations being given here.

The question is; who are you paying rent to if not the LLC? If you have the asset in an LLC then EVERYTHING involved with the asset must be processed through the LLC. Otherwise, you "pierce the veil" and the LLC serves absolutely no purpose. ALL rent, taxes, utilities, insurance, bank accounts, contracts, etc must be processed through the LLC.

Yes, I purchase it in the name of myself and my wife. 30 days later I Quitclaim the property into our 2-member LLC. I've done it many times.

 Was your loan conventional backed by Fannie Mae?  If so, the bank can't call the loan. 

A friend of mine just acquired a giraffe. He's only 5'3" tall and felt the giraffe helped him cope with his short stature. Daily life was fairly manageable. Low ceilings were tough, but you should have seen them trying to board that Delta flight out of Portland.

I agree with the comments other BP members are offering. However, I wouldn’t define your current situation as being “stuck” as you wrote because you said that you’d have $120K-$180K if you sold. My suggestion is to go ahead and research other markets and crunch the numbers. If those numbers look good, then you can make another post to glean more advice. For example, I invest in the Boise area and you’d be able to buy 2-3 SFHs with the money referenced above and be pretty well positioned. It’s a relatively high appreciating market with the investment requirement that’s a third of what it is there in SF. 

 That's not been my experience.  I find they've been very helpful to clarify any specific question I've asked them.  

Actually, the best thing to do is call the Title Company directly.  Or email them and get a response in writing. 

@Tom S.

@David M.

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 transfer 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;

Michael, there's quite a bit that you need to understand regarding how an LLC functions. I'd encourage you to do a search for the topic here on BP because there's a lot of information you can glean. Or, look on YouTube.

The specific answers to your questions are;

1) You'll want to Quitclaim the asset from your name to the LLC. This can be done by an attorney, or you can do it yourself at the country courthouse. HOWEVER, you first need to check with the Title Company regarding the Title insurance. Generally, the coverage of the 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."

2) The lender is generally going to be happy to receive the mortgage from anyone as long as its paid. However, its best to pay the mortgage using your LLC bank account after you've Quitclaim the asset to the LLC. And, a common practice is to wait 30 days after purchase before you QC the asset.

Fair warning; you’ll probably get some comments concerning the Due on Transfer clause. That's en entirely separate topic. 

Cheers!