Lease Option Question - Due on Sale

I am currently living in my home for a year and a half. If I were to move, I’d like to lease-option this one. Can I simply sign it over to an LLC before moving forward with a lease option? I’d want to protect myself, but not trigger the due on sale. I live in NY State.

I am not sure I understand your question? Why would you need to transfer it over to an LLC, that would trigger the DOSC because the loan was taken under your name and now you are transferring to a new entity? You can put it into a Land Trust and that would not trigger the DOSC. If you do a LO correctly, the bank should not know what is going on unless you record something in the public records which then could alarm them. If you buy a house and then a 1 1/2 years later you have to rent it, the bank is not going to go after your house except for now you are also giving your renter the option to buy. As long as your lease is no longer than 3 years you should be alright.

Good luck,

The advice about the land trust was correct. Your lease must be less than three years and MUST NOT contain an option to buy. Instead, give your lessee a first right of refusal to purchase at FMV at the end of the lease.

One more consideration is that the IRS considers most lease options to be ‘disguised sales’ and it can result in an unfavorable tax situation. Just make sure to dot your i’s and cross your t’s. Good luck.

Thanks. Why not give a straight option to buy?
Would a land trust with the LLC as beneficiary give me more protection from any liability issues, provided I maintain the LLC properly?

My scenario would be something like this…
Value of the home: $250k
My monthly mortgage payments: $1600 (PITI)
2 year option to buy at $300k, $10k non-refundable option consideration at signing, $1700 per month rent.
Optionee pays for all utilities and maintenance.

Any other costs I should be prepared for, other than attorney fee for drawing up the proper contracts and entities?

Thanks so much!