How to Transfer Property to an LLC With a Mortgage
- 1). Review your promissory note and look for any applicable due on sale or acceleration clauses. A due on sale or acceleration clause contained in your mortgage may require that the entire balance of the loan be paid in full to the lender after any transfer of title is made. If your mortgage contains such a clause and you are not prepared to pay the balance of the loan in full, then it may not be the appropriate time to transfer the title to an LLC.
- 2). Notify the lender prior to the transfer. Even if there is not an acceleration clause contained in your mortgage agreement, your lender may require you to notify it prior to any assignment, sale or transfer of title. If this requirement is contained in the promissory note, you must seek the lender's approval prior to making the transfer. Your lender will have certain underwriting requirements that must be met in order to approve a transfer to your LLC.
- 3). Execute a quitclaim deed or warranty deed transferring title to the property out of your individual name and into the name of the LLC. A title professional will guide you in determining which vehicle works best for transferring property in your state and given your circumstances. In many states, an effective execution of a quitclaim deed or warranty deed requires both unofficial witnesses and a notary public.
- 4). File the executed quitclaim deed or warranty deed transferring title to the LLC at the county recorder's office where the property is located. Typically, a filing fee is associated with filing deeds that transfer property interests, and you should be prepared to settle the fee at the time that you are filing the deed.
- 5). The LLC should begin making the mortgage payments as agreed to by the original obligor on the loan. The LLC is now obligated to make payments under the promissory note just as if the entity were the original obligor under the promissory note.
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