Personal liability? - Posted by Dave

Posted by Rich[FL] on April 05, 2004 at 22:49:17:

You signed personally on the note, right? So, you’re personally liable to make sure that note gets paid off.

If you don’t own the property after the note is signed (transfer title back to LLC or to a land trust with beneficial interest to an LLC), then you won’t be personally liable in the event of a suit. Unless possibly you were found to be grossly negligent in carrying out your duties as an officer of the LLC, then you may be held personally liable.

That’s my 2 cents worth.


Personal liability? - Posted by Dave

Posted by Dave on April 05, 2004 at 21:05:22:

I am in the process of establishing bank relationships in order to have access to cash. One of my mortgage lenders will not loan me money if Title is taken in an LLC. He is advising to close in my personal name and then transfer the property into an LLC. Would this make me personally liable in the event of a suit?

Re: Personal liability? - Posted by eric

Posted by eric on April 06, 2004 at 13:15:28:

It depends what you mean by “personally liable.” There is a distinction between liability for for acts of the LLC and liability for re-payment of the note. Transfering the property into an LLC will not relieve you from repaying the note personally. You are still responsible. If you fail to pay the mortgage payment, they can still foreclose on the property even though title may be held by the LLC. The property will still be encumbered by the note regardless of any transfers (assuming the mortgage or deed of trust was recorded).