Transfer To LLC At Closing?
I'm closing on two properties at the end of the month. So far everything has been in my name but I would like to transfer both to my LLC immediately, preferably at the closing table. My insurance will already be in the LLC name, at least that's how I got it quoted. What do I need to do to make this happen?
Thanks!
Create and file a quitclaim deed transfering your property to your LLC. As posted many times in this forum your run a slight risk of having the due-on-sale clause in a mortgage enforced but this is unlikely. Ensure you have a written agreement between you and the LLC govering who is to pay for what, who receives the profit, taxes, etc. just so there is no question later about who was entilted to take what deduction, who owes what tax, etc.
Also, you and your LLC (and any mortgage holders) should be listed as insured on your insurance policy.
There is no need for any agreement between you and your LLC. Also don't use a quit claim deed---use a warranty deed.
If the lender will allow the insurance binder in the name of your LLC they are also not going to care about having the property deeded to your LLC directly.
I want to understand this totally. The insurance is in the name of the LLC, me and the mortgage company correct? Will the insurance company then send a new copy of that policy to the lender? Now in a worst case scenario, what happens if the lender does get wishy washy about it? then do you just transfer everything back into your name?
Thanks
Joe
[addsig]
I want to understand this totally. The insurance is in the name of the LLC, me and the mortgage company correct? Will the insurance company then send a new copy of that policy to the lender? Now in a worst case scenario, what happens if the lender does get wishy washy about it? then do you just transfer everything back into your name?
Thanks
Joe
[addsig]
Why is a warranty deed preferred over the use of a quitclaim deed? I am doing the same thing, but adding my kids from my first marriage (at which time I purchased this vacation property) as LLC members. I plan to increase their interest in the LLC by the annual amount allowed by IRS ($11,000 each) as a percentage against the appraised value (this month). By the time I pass on they should have the majority of the property, and during the interim the continued ownership by the family should be protected. Or does someone have a comment to the contrary.
Answering the 12-1 question of Skiboyone, why to use a warranty deed.
To transfer property from your personal ownership to your own LLC (or living trust or other entity that you own), follow one or the other option below:
(1) If you use a warranty deed, basically it is your promise to yourself that that you will protect the condition of title for yourself. Why not; would you want to deny liability to yourself? Here's why: The title insurance policy insuring the condition of your title continues to protect you for your warranties of title to the grantee entity. Simply, if there is a title defect that would be covered by your title policy, then your new grantee entity will have the benefit of that title policy coverage due to the connection of your warranty of title.
(2) If you prefer to use a quitclaim deed, then you should get an endorsement from the title insurance company that issued the policy when you purchased, which will agree that your new entity has the rights of an insured. Without that endorsement, if you convey without a deed warranty, the prior title insurance policy does not protect the condition of title for the new entity.