Hi everyone,
I have tried to read many of the previous posts prior to posting mine, so please forgive me if I am asking repeated questions.
We have formed our LLC in AZ, purchased a house in NM [and closed on that property] and have just had the Warranty Deed notorized for the purposes of transferring the title to the LLC. Some friends of ours, who have numerous properties, have also stated that a Purchase Agreement and a Bill of Sale are also necessary to fully move that property to the LLC. Is this valid advice?
Are there any other steps I should be taking to mitigate our personal liability?
Thanks much.
Pay off the loan so you will not be liable for a mortgage
Pay the taxes 99 years in advance so you will not be liable for taxes
Build a 100 foot high fence around the property so no can can come or go and then you will be protected.
You may want to buy some insurance too, I suggest fire, wind, hail, terrorist, hurricane, flood. acts of Buda and God and Mohammad and especially the Devil and Murphy.
In other words you can never be fully covered or protected. You will have some risk. If you can not sleep at nigh with theses risks then do not buy property.
Actually a LLC is not all the protection it is cracked up to be. I just read a post about this but forgot where on the forum. I may come back after I find it and add it here, I thougt it was great.
the bank may require the mortgage be in the name of the owner, not the llc. I was infomred here in flroida, until the banks get to know you. You will need to get a mortgage in my name, then get it transferred to the llc…
steve
If you have a bill of sale then you have to pay off the previous Lien Holder or else the title company won’t issue clear title.
You can add people via title transfers at will, but it clouds title and may make selling the house at a later time more complicated.
By definition if you have a bill of sale, then you’ve sold the property and thus the ‘Due on Sale Clause’ will most likely be invoked by the lien holder.
You already own the property, titled in your own name. You want to transfer title to your LLC.
Just record your deed. No purchase agreement is needed, you already own the property. Your LLC is not purchasing, you are simply making a contribution of equity to the LLC.
A bill of sale is usually used when personal property is sold. Since you are not really selling, I don’t see the need for a bill of sale either.
3KidsandaDog - While I’m joining this conversation a bit late. :banghead , I’d say your friends gave you some pretty good advice, except it could be overkill, since you’re probably the sale member of your LLC? When in doubt, check with an attorney. An answer – the proper one – to this type of question shouldn’t cost you very much.
IF, however, you were selling the LLC, or your interest in the LLC, I think it would be more likely that you would need a bill of sale. The Due on Sale clause, however would NOT be triggered if you are the sole member – you’re not selling the property, you’re just changing whose names appears on the title, IMO.
However, this could vary from State to State, as legal entities like LLC’s and Corporations are established through statute by state legislatures, not the Federal Gov’t. They are therefore subject to subtle differences from state to state.
Changing the deed does trigger the due on sale clause. The LLC and the individual are different. To imply otherwise means the LLC and individual are just alter egos, which voids the whole purpose of the LLC.
As to the original question, the best option is to purchase in the name of the LLC. If transferring to an LLC after the fact, a bill sale, purchase agreement, etc. is not necessary unless the LLC is buying the property. With that in mind, a transfer for less than fair market value can be considered a fraudulent transfer, which can create a host of other problems should the LLC or its member(s) get sued.
