Best Way To Shield A Property In LLC From Lender...
I have an LLC with TWO properties in it. One of those props is in pre-foreclosure. I want to make sure the lender does not have any claim to the non-foreclosing(NF) property. 1) do i move the NF property into another new LLC or 2) do i move the foreclosing prop out of the LLC into my name. 3) is quit claim or warranty deed best for this.
thanks newkid. but here are the specifics. i am not technically in default. ( only 2 pmt behind).and the lender has this workout plan called "re-age agreement" that i signed to extend time to bring acct current. i want to get the good prop out of the LLC now before things get worse. the bad prop is upside down and is a teardown where value is half what i owe so short sale may be best out anyway.
cjmazur,
Would you explain how a "Due on Sale" clause can block a transfer of the ownership of a property?
John $Cash$ Locke
[addsig]
New Kid,
Your post was right on point to this poster asking the question and he should really heed your advice..
Then you have those that post just to build up their post count without any idea what they are talking about.
John $Cash$ Locke
[addsig]
great forum guys!. seems like everyone has good intention to help on this site. this is an issue that is very relevant today. so i decided to ask an attorney about this and it is even more confusing as it is a GREY area legally. technically a fraudulent transfer is not easy to prove, costly and therefore lenders rarely pursue it except in high dollar cases. it is also more relevant after someone files for bankruptcy. in my case it seems a far fetched scenario even if i transferred the prop today as the lender would have to prove "malicious intent to defraud"- a very expensive burden to prove. as far as the deficiency judgement, in georgia the lender has right to pursue but has to have court order and notify borrower in 30 days of the foreclosure sale or it loses that right. this is also a rarity as a lender has to PROVE to court that the value of the property exceeds the loan value. and in this falling mkt, this rule favors the borrower. so in the end, paranoia is an overreaction to reality.
okay so here are the answers to the issues. the foreclosing property has a first position HELOC that is at stake. this heloc does not have cross -collatoralsation on it. the LLC is not the guarantor. the security for the heloc is the said property. there is no mention of LLC in the mtg docs. it only mentions me by name,personally. regarding the non-foreclosing property, it has no mortgage and is free and clear. the only thing common about the two pros is they both share the same LLC. now can someone give me pertinent advice instead of opinions. thanks
[ Edited by ITBInvestor on Date 01/03/2009 ]
smithj2:
Double check and be clear about property owned as "sole and separate".
In CA at least, if any liability on that property is paid for w/ common property funds (e.g. a joint checking account), then the spouse may have a claim to the property.
Voluntary Assignment versus Forced Liquidation.
Apples and Oranges?
Just a step apart.. I have seen BK trustee sell LLC interests w/o the consent of other LLC members.
I guess what I am trying to understand is can an operating / tic agreement block such a transfer?
In this case the effect would be the same, no?
House owned by LLC
debtor owns all or part of LLC
Creditors end up w/ Debtor share of LLC
Debtor has "lost" the house.
newkid; i spent some $ consulting with a specialized atty on this issue ( this is now my second attempt),and most things you have said are correct. except for one BIG issue where you are incorrect according to him; It is not considered a (FT)fraudulent transfer AT ALL in my case.. the reason is simple; the LLC is not the guarantor and nowhere mentioned in the loan docs. as a result from a legal standpoint moving any asset out of that LLC has no FT relevance. and actually, this bank made a boo boo by not mentioning the LLC as the legal owner of the property at time of the loan. infact at time of any foreclosure, when it does a title search it will then discover its mistake and wont be able to give clear title unless i sign docs to change it back to my name.
newkid; i know you have best intentions in a nutshell, i am more concerned about doing the right thing in a situation that is stressful and not a fault of my own in this free falling mkt. my problem is also similar to many people right now and this discussion is healthy- and why i posted this question. what is amazing is that after spending over $500 on professional advice, THERE IS STILL DIFFERENCE OF OPINION even among attorneys. but i like your idea of sitting tight than risking the possibility of triggering a red flag. i hate letting this prop go into foreclosure but seems short sale option is out. based on my equity in other real estate. worst case this prop takes a 100k haircut and if bank pursues i can settle at 20k or so down the road. last question to you: you have any ideas of encumbering a free and clear prop to avoid sue-happy attys?