Due On Sale Clause
Has anyone had any trouble transferring their property to an LLC and triggering the Due on Sale Clause?
Is it possible to have asset protection from transferring to a Land Trust with our LLC as trustee and having the same kind protection as if we had transferred directly to our LLC? does this get around the Due on Sale Clause?
My husband and I have bought a 3 family property under our own names, live in one of the units, and want to transfer title to our LLC (where we are the only beneficiaries) for asset protection but are worried about the Due on Sale Clause.
We have been told to just transfer title and not notify the bank but somehow this worries us as we would rather not breach our contract and worry about the bank accelerating the loan but would rather find a way that works for everyone if that is possible.
Does anyone have any ideas or experience with this?
If your property taxes are not included in your mortgage payment, but are paid seperately, chances are the bank won't even know about the transfer, since they are generally alerted by the payment of realty transfer taxes.
Lenders rarely invoke due on sale clauses, unless the mortgage is in default, the homeowner's insurance lapses etc.
I've never had a note called due-on-sale. However, my friend recently did, and all the bank requested was a copy of his Articles of Organization from his LLC (to determine if he was really a member) and the bank allowed it.
Make sure you handle the insurance correctly as well:
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=472
Tim
Many thanks for your input! It is much appreciated!