Transfer Title to LLC - Posted by Ellen Lyons

Posted by Roger D on October 11, 2002 at 14:24:32:

Ellen,
I think that is a question I would have a qualified estate planning attorney answer. I can write a purchase agreement or a contract for deed and feel comfortable but I’m more careful when it comes to estate planning.

Good Luck,
Roger D

Transfer Title to LLC - Posted by Ellen Lyons

Posted by Ellen Lyons on October 11, 2002 at 08:40:15:

Is anyone out there a long term hold landlord that has been with the same lender for awhile and then transferred title from their name to their LLC? (No Land Trust) Most of the questions here have dealt with subject to deals and the problems with the DOS. Has anyone’s loan been called with payments current, good rapport with lender, etc, going straight into an LLC? ANYBODY?

Re: Transfer Title to LLC - Posted by lils(CT)

Posted by lils(CT) on October 11, 2002 at 16:44:07:

How about the insurance co? I too changed from personal to llc. I informed the insurancce co & told me I had to get a commercial policy, more expensive. Didn’t tell the bank, I figured they’ll find out when the insurance company notifies them of the change. But like everyone else has mentioned, I too feel confident that they will not call on a performing loan, also being paid by checks from the llc account.

Re: Transfer Title to LLC - Posted by Roger D

Posted by Roger D on October 11, 2002 at 12:44:00:

I personally owned a rehab property financed by the bank and subsequently started an LLC. I called the bank and said I wanted to deed the property over to the LLC, on the advice of my lawyer. The banker said, “that is what I would do if I were you, go ahead”. You see, he didn’t care. Why? Because good ole yours truly still had his personal gaurantee on that mortgage. It did not change the banks position as it concerned their security in the property.

Good Luck,
Roger D

Re: Transfer Title to LLC - Posted by phil fernandez

Posted by phil fernandez on October 11, 2002 at 09:24:39:

I’m a long term landlord and hold most of my properties for years. I’ve been in the exact situation you describe.

I have bought rentals in my name by getting bank financing in my name. At that point I didn’t know any better and before about 1997 no one even knew what an LLC was. I have had no problem with the bank when I have transfered these rentals from my name to the LLC. Never told the bank. Never heard from them. I even pay my monthly mortgage payment with my LLC checks. They like their payments any way they can get them as long as they are on time. They don’t want to call in a performing mortgage.

Re: Transfer Title to LLC - Posted by Ellen

Posted by Ellen on October 11, 2002 at 17:07:13:

I am gaining confidence with each posted reply! Thanks to everyone for taking time out to respond. I’ve been dragging my feet in setting this LLC up in fear of the DOS. Now I’ve just got the operating agreement question to be answered, and I’ll be ready to go. I posted the question on the legal forum, and I’m just praying they don’t tell me to find a competent attorney to answer the one question remaining: How to pass the entity to one child with the wording in the operating agreement. Anyone? Regarding the insurance issue - our policies renewed in May with a whopping increase. (Nationwide, OH) We have had 0 claims in 5 years. They are justifying the increase with a lot of blah, blah, blah. That was my next search on this site. I’m sure I’ll find plenty of horror stories there, along with some suggestions. (I Hope) You can’t just keep raising rents to cover the increases, especially in this environment.

Re: Transfer Title to LLC - Posted by Ellen

Posted by Ellen on October 11, 2002 at 13:51:41:

Thank goodness the two of you responded! This website rocks! It is so stressful & frustrating trying to get answers from people about this business. You sometimes feel like you’d pay a million $$$ for one straight answer. I have just one more question for now. (Doesn’t everybody?) In the operating agreement of a husband & wife LLC, how would you transfer the rights to a sole heir, your child, so if you die they can keep operating the LLC, or if they choose, sell the properties? What wording would you use? We don’t want to make her a member now because of the partnership rules, but do want her to be able to step in without a problem. I’m not looking for an absolute legal answer, just some ideas at this point. I have Mark Warda’s book on forming an LLC, but this is not addressed. If anyone has a thought or has an LLC set up like this, I’d really appreciate a response. Hopefully I’ll be able to help someone out here one day, but all I know is stock market investing, and I’m not allowed to talk about that here.

Some Answers To Your Questions - Posted by phil fernandez

Posted by phil fernandez on October 11, 2002 at 20:04:03:

The operating agreement is really a lot of blah blah blah. In it it talks about who the members are, how they dissolve the LLC, about membership, what the members can and cannot do, the purpose of the LLC to do business in a lawful way and on and on. A lot of boiler plate. I’ve got 12 LLC’s and the operating agreement is the same for each. Don’t get blinded by the boring mumble jumble. AND I WILL TELL YOU TO CONTACT YOUR LOCAL LAWYER ABOUT YOUR LLC.

Now as you know I am not an attorney. Not even sure if the operating agreement would dictate in it who you pass your interset in the LLC to. That’s why you have a will. In the will you will dictate who you pass your assets to, which would include your LLC.

Here’s an example. I have the 12 LLC’s. I am the only member of each. I own all of them. They are mine. I also have a will that says all my assets pass to my wife. So upon my death, my wife would get the LLC’s and all of the assets held by them. Again your most prudent step would be to contact a lawyer that deals with estates.

Now for the insurance question. My insurance company doesn’t care what entity that I hold my property in. They said that they insure the property not the entity that holds the property. That’s good enough for me. And yes rates have sky rocketed. But keep in mind they have been very stable and pretty much the same for the past 15 or so years so I look at this latest jump as a correction. My State Farm agent tells me that he thinks that this big initial increase will be that, a one time adjustment to the realities of the market. Let’s just hope so.