Lender Will Not Let Me Transfer Title To LLC
Hello,
My name is David and I have 4 single family rental properties in Florida. I was advised to set up an LLC for both tax purposes and personal liability protection for those properties. They are all conventional loans. I have contacted 3 of the 4 Mortgage companies that hold my notes and each of their assumption departments told me that their investor guidelines prohibit that transfer as I was approved for the loan not my LLC.
What should I do? Any good resource books or web sites?
All advice welcome.
Thank You!
David
Hello David,
Sorry, no help here. I am researching why I should put my properties in an LLC. Have not done so yet.
I have a question, tho. I understand that an LLC protects the owner from certain liabilities, but how is it tax advantageous? Thanks for any detail. And good luck w/question. ~C
Why did you even ask for permission from your mortgage company? They are correct in that they did approve you and not your LLC. As long as you (or your LLC) continue to pay the loan on time they will be content.
Hi David, My lawyer has advised me not to own rental property in any form of corporation because in Florida you have to use a lawyer to evict. I did learn this the hard way. However you can put your properties in a land trust for asset protection. My accountant told me to use my corporation only when I'm going to turn a property in a short period of www.time.My lawyer gave me the same advice. I do live in Florida and have several www.properties.I like Mark Warda's seminar he puts on for Florida Land Trust's in www.Tampa.I hope I've helped.
Transfer the property in the trust and then make LLC the beneficiary. No residential lender will officially allow you to hold title in LLC - you need a commercial mortgage to do that. But most won't prohibit placing property in the land trust, and then you can change beneficiaries at will.
>>Hi David, My lawyer has advised me not to own rental >>property in any form of corporation because in Florida you >>have to use a lawyer to evict.
Huh??? Could you elaborate on this, please? On the face of it, it doesn't make much sense... Can't an LLC use a lawyer to evict, just the same as a private person can? It sounds like your lawyer may be trying to sell you on the idea of _him creating_ a land trust for you. I'm not saying whether that's good or bad, I honestly don't know. Don't live in Florida That said, if a lawyer said to me what you stated above, he or she wouldn't be working for me.....
What I would suggest wrt transferring to an LLC is that you personally guarantee the loan and transfer the title to the LLC " for estate planning purposes". I have yet to see any bank have a problem when it's stated that way. They just want to tmake sure that they have recourse on the loan, until your LLC has a solid track record.
-Jeff
I live in Florida and that makes no legal sense. Don't own the property as a corp because you need a lawyer for eviction? Corps can hire lawyers too.
Also, the benefits of land trusts to my view are more for keeping assets private. I think a llc offers better legal asset protection. Lands trusts are penetrable
What I'm saying is if you own property in a corporation, Florida law says you have to have a lawyer handle your evictions. I handle my own evictions because it's much cheaper. I found this out after my tenant who lived in a house owned by my corporation,wrote a letter to the judge to stall the eviction.Because the corporation owned the house I could not show up in court without my lawyer which ended up costing me over $500.00.You are right, saying a land trust is for asset protection. The reason my accountant said to use my corporation for flips and other short term properties is to avoid being labled a dealer in real www.estate.This is so I don't lose my tax benefits.Sorry I confused you two. :oops:
I am in Florida and have evicted 5 or 6 different times without the help of an attorney. You have to use a processor or a sheriff to serve papers but you do not need a lawyer to do anything. Having your property deeded to anything (LLC, land trust, etc) has nothing to do with how eviction is handled.
[addsig]
After rereading the post, I have never had a tenant challenge the eviction, do you know the statute that dictates using a lawyer when in a corp? I have never heard this.
A corporation can't be represented by a non lawyer as far as I understand the rules and law to be in Texas. A 1 owner LLC might have a decent argument why this shouldn't be, but it is true probably in most states, as there is a interest in protecting the other members of the corporation from being represented in court by a non lawyer.
Quote:
On 2004-11-28 00:18, ray_higdon wrote:
After rereading the post, I have never had a tenant challenge the eviction, do you know the statute that dictates using a lawyer when in a corp? I have never heard this.
At least where I come from, the "C" in LLC stands for "Company," not "Corporation," so I'm not sure how this would present eviction problems in this case. Lots of people mix this up, though, and I find myself always educating people about it; my insurance guy still doesn't quite get it (he's a little thick, but good).
And though it's best to be above-board, as long as you continue to make payments--even with checks from your LLC's account--your lender is unlikely to go to your recorder's office and pour through the records to see if you've changed the name on your properties' titles. If you're anxious, refinance them into your LLC with you as co-signer--you might be able to 'bundle' them in the process and get a better rate--as at least some lenders can work with that, and you'll be building your LLC's credit record in the process..
Quote:I am researching why I should put my properties in an LLC. Have not done so yet.
I have a question, tho. I understand that an LLC protects the owner from certain liabilities, but how is it tax advantageous?ceinvests,
There are no tax advantages gained by holding your rental property in an LLC instead of holding in your own name.
The main purpose of the LLC is to shield your personal assets from liability in the event of a lawsuit -- In other words, limit your liability exposure.