I am forming an LLC for the purpose of renting out my former residence in which there is a mortgage outstanding in me and my wife’s name. We will deed the property to the LLC and file this with the county so it officially recorded. It apppears from others experience that you would likely be denied or trigger the due on sale clause on the mortgage if you attempted to officially transfer the mortgage to the LLC.
If there was a claim against the LLC and the property had to be liquidated to cover the claim, would the proceeds from the liquidation 1st go to pay off the outstanding mortgage debt and only the remaining amounts would be available to pay the claim or would my wife and I be liable for the outstanding mortgage?
For our ongoing mortgage payments we would fund the LLC and them make the payment from its checking account. We were concerned that with our names still on the mortgage for the property that you could “peirce the corporate veil” as we are not seperated from the property in the LLC. Anyone have any experience with this?
We plan on getting an attoney to set everything up, but wanted to come in with as much knowledge as possible before meeting with him/her.