Help! A lender / title insurance screw up.......and lesson learned! :(

I refinanced a rental property in Arizona and closed in late October 2008. I had informed both the bank and the title company, verbally and by email, that I wanted the property deeded into a new LLC that I had established, and not into my name. I was very specific and even asked the title company to make sure that they included the necessary Fairway endorsement language. The bank said that I had to be on the note, and had to be personally liable - I was ok with that, and had suspected that it would need to be that way.

Two weeks later, I received the title insurance policy which made me realize that it was deeded in my name and NOT in the name of the LLC. The probably got compounded when I sent notice to the bank and told them that I was proceeding with deeding the property to the LLC, only to find out that they had already sold the loan. The new servicer’s response was “hell, no” when I said that I wanted to deed the property over to the LLC.

The bank called me and they are trying to figure out something - not sure what, I am not optimistic. The title insurance company is doing the endorsements for the policy, but wants me to deed the property first, which I am not prepared to do until I figure out what is going to happen on the financing end - I don’t want the loan to be accelerated, 30 days after I closed!

My assessment: Nothing can be done on the financing side of things. The title policy should be “endorseable” regardless of who the grantee is on the deed (I’ve done this before). Finally, the ‘risk’ associated with owning the real estate (which was why I wanted the LLC to hold the property) can be mitigated by deeding the property over to the LLC but not recording it (stick in a drawer). The LLC is a multi-member LLC and I would have the deed delivered, noted in minutes, and in a resolution. As I understand it, there isn’t a requirement to record the deed. Not recording the deed means that the servicer would not find out (they already know this is my intent) and would not accelerate. I normally would never not record a deed, but since I am the grantor, I don’t think that risk is anything to worry about.

There is much more detail, but i suspect this comedy of errors is long enough. Any advice folks? Thanks in advance, and sorry for the lengthy post!

advice #1: probably worth a visit to a real estate atty.
advice #2: next time don’t close if all the paperwork isn’t correct.