My husband and I live in PA and own several rental properties in IN. We recently set up an LLC here in PA. Should I be moving these properties into this LLC? If so, what is the proper way–to simply Quit Claim them into the LLC (or from prior reading of this site–increase my insurance)??
Is it best to simply increase the amount of insurance basic ($300,000 to $1 million, as I read earlier)?? It sounds like the proper way to title this is to Warranty Deed again if I choose to do so? Is it worth setting up an LLC in IN at all for these 6 properties??
If you want to have them in your LLC, you’ll have to register your LLC as a foreign entity in IN and comply with all fees, reporting requirements, etc for their state.
You will need to register your PA LLC in IN if you want the LLC to own them.
A quit claim transfer will void your title insurance and create a potential fraudulent transfer if anything happens on the rental property that generates a judgment. That means the LLC will be treated as if it were owned by you. You should use some kind of warranty deed and make the transfer for value to avoid this situation. Also, any money you take out of the LLC will be considered a fraudulent transfer and be ordered back into the LLC to pay any LLC debts.
Since you are out of state, I assume you aren’t managing the property, but you have to properly supervise your manager. Otherwise, you will be held liable for failing to properly supervise your employee. That means a charging order against the LLC can prevent anyone from taking money out the LLC, prevent the LLC from buying or selling major assets, and a receiver will be appointed to manage the LLC until the case is resolved. That can cost as much as $600/hr and creditors use it to force a settlement on their terms.
I am not sure how the properties in Indiana are presently titled. Make note that several municipalities in Indiana now require “Landlord Registrations”. If you change title from a personal name to a LLC, they will probably note that and hit you up for the fee plus a penalty.
Indiana does indeed require that if you are going to be doing at minimum $X of business in the state, your foreign (out of state) LLC needs to register to do business there in Indiana. It is a quick form that you can fill out.
I would suggest, that if you bought the properties with a Warranty deed, to then execute a Warranty Deed into your LLC. If there is a loan presently on any of the properties, you would first need to check with your lender to see if the title change causes a technical default of the loan.
I personally invest in Indiana as well. Curious what area your properties are located in