Hello, to everyone reading this post and happy new year, my inquiry is in regards to an inquiry I posted earlier. I believe that if my business partner score is insufficient to perform a 90-100 percent refi, and his name is on the note, it may be possible for him to offer a quitclaim deed to me and I will be able to perform the 90-100 percent refi if my credit score is sufficient to meet the lender’s requirements. My inquiry is the following:
If my business partner and I transferred the title of the property from his name to the LLC, and we are already making payments from the LLC bank account, and it necessary that title must be transferred to my business partner or I to perform the refi, would a lender
a) still allow or accept payments via the LLC bank account via a personal guarantee on the new note?
b) would the payments on the note have to be issued from our personal bank accounts??
c) is it simplier to perform the refi before we decide to transfer property to the LLC to avoid complications?
Any suggestions would gladly appreciated. Thank you
Hello,
I’m not sure if I completely understood your questions.
a.) and b.) The lender would not care where the payment is coming from. The loan would be in your individual names.
c.) You should speak to your real estate attorney about not titling in the LLC upfront. Frome a lender standpoint it would be easier.
They questions were not clear so I hope this helped.
Thank you Investment Loans for your feedback. I just want to ensure that my understanding is sound in regards to this process. If title to a property is held in an LLC and the payments are being made from the LLC business account. My business partner and I opt to refinance and a lender notifies us that title must revert back to business partner a or b. Are you stating that
- The lender will not care if payments on the new note are still made by the LLC bank account based or pending that:
a) title is assumed by the individual not the entity.
b) does this not present an legal problem because if title is in the individual’s name and the LLC is making the payments, couldn’t this scenario subject your entity to the “alter ego” doctrine or a penetration of the corporate veil?
I would be wary taking legal advice from this forum. Therefore I will give you no legal advice as to who is liable for the property. But I will confirm that the bank will accept a check from your LLC. They just want to qualify the individuals for the loan rather than the entity.
Maybe I’m wrong but if I wanted to pay my mother’s mortgage payment for her, would that be illegal?
Wouldnt that be the same thing? You have a mortgage in your name and someone/some entity is paying thepayment.
If your asking for a liability perspective then you would need to consult that with a real estate attorney.
The lender doesn’t care with the check comes from or off whose account it is drawn…it cares that it is on-time and that it clears the bank.
Most DOSC flags rise when the property insurance carrier changes the insured’s name.
Keith
thanks alot for the responses Mortgage Mark, Investment Loans and kdhastedt. Continued success in wealth creation for the new year.
Hi all,
I find this to be a very interesting thread. I have a related question - hope it’s okay to piggyback on this thread.
I have several rental properties as a sole owner, and ideally would like to protect equity in each property by transferring each property into it’s own separate LLC (I would be sole owner of each LLC also).
In this circumstance, I’m very concerned about what the lenders will do when they see that a property has changed hands to an LLC. Would they pull the loan? Should I be upfront with the lender and ask them, or is there a known, established practice in this regard that I can follow?
For instance, I believe someone above mentioned that when insurance names change, this creates red flags for the lenders. Would this be true in my example here? What other red flags would come up in this process? What would be the best way to proceed in this regard? I realize no one can provide legal advice, however my attorney and my accountant unfortunately DO NOT have this kind of specific information about what banks/lenders will do when property transfers to an LLC.
Thanks for any assistance you can provide in regard to this issue.
You will always get conflicting info on this. I’d speak to a real estate attorney in your area and do a LLC search here to browse through other threads.
There are a couple lenders that will allow to purchase in your name and title in the LLC at closing.
Loans have to be 80% cltv or less and you must qualify using full doc, stated income/full assets, full income/stated assets.
Several other parameters as well.
Thanks for the advice. Can you share the lenders/contact info that will do this kind of closing?
Also my attorney is a real estate attorney in an office that specializes in real estate, however when it comes to the behavior of lenders in this regard, I have found the attorneys just don’t have the specific background that I need. I figured this site would be a better place to glean more specific experiences with LLCs and lenders. Yes - I’ll do a search here on LLC. thanks again.
Any other advice out there? I must imagine that there are a lot of individuals who have been through this process before. Thanks everyone for your help.