Posted by Jimmy on July 19, 2005 at 07:41:00:
informing the lender is a matter of courtesy. I do most of my loans with two banks, and both of my bankers appreciate being “in the loop.”
DOS and LLC’s - Posted by John
Posted by John on July 06, 2005 at 20:03:06:
I have finally decided to keep a couple properties as rentals. I bought them with traditional financing and had them titled in my name. I rehabbed them with the intent of retailing. I feel these would make sense to keep as rentals. I have created a single member LLC with Bill Bronchick’s paperwork. I know I can just deed them over to to the LLC, but I have a couple questions first.
What does this do to the DOS clause?
What do i need to do about the insurance?
Any advise will be greatly appreciated.
Re: DOS and LLC’s - Posted by Rich[FL]
Posted by Rich[FL] on July 07, 2005 at 12:23:31:
If you’ve read Bronchick’s materials, you’ll note that he states that ANY transfer of ownership to another entity will trigger the DOS. HOWEVER, according to the Garn - St Germain law, you are allowed to transfer to a trust set up for estate planning where you maintain beneficial interest to that trust. Add the trustee as additional insured on the insurance policy.
Now at this point, you can assign beneficial interest to your LLC. However, keep in mind that this will technically violate the DOS. Because this transfer is private and never part of the public domain, the bank will never know.
This is how property is transferred to another entity without triggering the DOS.
Hope this clarifies the topic a little more. If you want more detail, read through the archives here and re-read Bronchick’s materials.
Rich
Re: DOS and LLC’s - Posted by Jimmy
Posted by Jimmy on July 07, 2005 at 06:50:40:
transfering a property into a entity which you control should not trip the DOS clause. But you should call your banker and let him/her know what you are about to do.
You should also inform your insurance carrier about the transfer. They may add your entity as an additional insured, or wait until the policy renews.
Re: DOS and LLC’s - Posted by John
Posted by John on July 18, 2005 at 20:31:25:
“But you should call your banker and let him/her know what you are about to do.”
Never know anyone to do this, and never heard of them calling a loan due because of this tpe of transfer. As long as you are making the payments you should be fine. The insurance is a pain, no doubt. Some insurance will not cover properties that are in an LLC. Your umb policy is useless after you transfer them too. So you will need to get another umb policy that covers the properties, which is more expensive.