Posted by Bill K. (AZ) on May 19, 1999 at 15:12:33:
David,
You’re right! I did miss the point. I’m reading too many posts. My small mind gets easily discomboobulated.
Sorry for the confusion.
Bill K. (AZ)
LLC - Titling Properties - Posted by Andrew P
Posted by Andrew P on May 19, 1999 at 13:42:32:
Senerio:
A conventional mortgage exists on rental property titled in the name of two joint investors, i.e. John Doe & Bob Smith. An LLC is then formed amongst the investors. The next step is to deed the title of the property to the LLC.
Problem:
When mortgage company was apprised of the impending title change from the names of the individual investors to the Limited Liability Company the mortgage company said they will not allow property to be titled in the name of the LLC.
How can this issue be resolved in order to gain the liability protection afforded by the LLC?
Re: LLC - Titling Properties - Posted by Eric (NH)
Posted by Eric (NH) on May 19, 1999 at 22:39:12:
Why would the mortgage company care if title is being transfered to an LLC, since the two investor owners are obviously still liable personally for the original note? Maybe the mortgage company is afraid that the owners will allow the property to deteriorate under LLC protection? Or maybe, the mortgage company just doesn’t want to try to understand the reason for LLC protection?
Eric
Re: LLC - Titling Properties - Posted by John(NH)
Posted by John(NH) on May 19, 1999 at 15:51:14:
Deeding title to the LLC would violate the DOS. The mortgage company cannot disallow it, but they could easily call the loan due. Instead, Bronchick suggests deeding title into a land trust (permitted by the Garnes St. Germain Act), and then make the LLC the beneficiary.
Re: LLC - Titling Properties - Posted by Bill K. (AZ)
Posted by Bill K. (AZ) on May 19, 1999 at 14:14:22:
Andrew,
You don’t indicate where you live, but I just recently purchased a property in my LLC’s name here in Arizona. I received no hassle from the title company.
Now, I’m not a lawyer, but since LLCs are legal entities in every state of the union, I suspect that your title company might be mistaken. You could try contacting other title companies to see if they have a problem with this. If not, I’d change title companies.
I used Bill Bronchick’s course to help me create my LLC, and I don’t remember reading anything about having a problem getting real estate titled in the LLC’s name. In fact, if you follow the rules for your state, an LLC, as a legal entity, would definitely be allowed to hold title to real property.
If you find out something different, I’d be curious to know the details.
Good luck!
Bill K. (AZ)
Re: LLC - Titling Properties - Posted by Andrew P.
Posted by Andrew P. on May 20, 1999 at 08:47:07:
Eric (NH), You hit the nail on the head, the mortgage company does not want to try to understand the reason for LLC protection. Any suggestions?
If I deed the properties to the LLC, the mortgage company could call the notes. In addition, if I do not inform the mortgage company that I deeded the properties to the LLC, the year-end 1099 forms will not reflect the tax identification number of the LLC; causing potential IRS trouble.
Is a land trust the answer?
Re: LLC - Titling Properties - Posted by David (TN)
Posted by David (TN) on May 19, 1999 at 14:58:18:
I think you missed his point, he already owns the properties and now wants to transfer them into the LLC’s name. You speak to the fact of purchasing a home in an LLC’s name, I don’t think that’s what he is trying to do.
Re: LLC - Titling Properties - Posted by Eric (NH)
Posted by Eric (NH) on May 22, 1999 at 15:00:53:
Andrew,
When I spoke to the officers at the bank where I got my loan, they said no problem; then again, this was a commercial loan (> four units) which was being held by the bank, so they knew me. You may have a more difficult time if you are dealing with a traditional loan which was sold under Fannie Mae guidelines. If you are unable to get permission to transfer, and you don’t wish to risk a DOS, my best advice is to make sure you are well insured (e.g 1m-3m), so that any potential judgement against you will be easily handled by your liability insurance.
Eric (NH)