Mortgaged Property - Transfer To LLC
I have a rental property (single family dwelling) w/ a mortgage, that I want to transfer to an LLC. My question is, will the mortgage company allow me to do this, and if so, am I protected legally if I own the property in an LLC, but the mortgage is still in my personal name? Basically, could a lawyer claim that since I have still have the mortgage in my personal name, the LLC is a sham?
Quote: Basically, could a lawyer claim that since I have still have the mortgage in my personal name, the LLC is a sham?
A lawyer could claim it, but probably that wouldn't fly as the sole reason to pierce the corporate veil.
What you want to do is make sure that there's decent liability coverage on the property and that you, personally, have an umbrella policy so that you're protected if the liability limit on the property is exceeded and the plaintiff's attorney starts trying to push farther.
The LLC should act as a firewall in that scenario, but if you've done all the insuring, that firewall isn't entirely necessary except potentially as a way to keep your name off any suit papers (valuable in and of itself in these days of credit bureaus).[ Edited by flacorps on Date 10/15/2003 ]
Thanks! What about the mortgage company though...Will they have a problem with this?
Quote:
On 2003-10-15 13:40, blandol wrote:
Thanks! What about the mortgage company though...Will they have a problem with this?
You face the usual Due-on-sale issues. If your're ready to refinance, and don't mind the cost of doc stamps to re-title the property, no sweat. If you are concerned with keeping the original mortgage, you'll need to see if the lender will let you make the transfer and waive its due-on-sale right (many would counsel just doing it and hoping the mortgagee lets it slide, but with rates potentially headed up, that could turn into bad medicine ... tomorrow, or years down the road).