We just purchased an investment property in NJ as sole proprietors. In order to limit liability, we are planning to create an LLC and transfer the deed to the LLC. Concerns are the following: does the mortgage company need to be notified? does insurance company need to be notified? does title have to be transferred as well? can it be done without a lawyer?
Howdy Emclean:
No need to notify the mortgage company. They will not release you from personal liability. Some will allow the transfer and some will not. No sense stirring up the mud if you do not have to. Insurance is up to you. I would leave it alone or add the LLC as additional insured party but would not change entirely. They will notify the lender.
Transferring the title will be necessary. It is very simple to do. Get a blank deed and fill it out and go to the courthouse and record it. The LLC will be the grantee and you will be the grantor. Copy the legal mumbo jumbo from the deed you have. The stuff that says Lot Block_ XYZ Subdivision as recorded in Volume___ Page ____. They have a notary usually at the courthouse.
Not to mention the Due On Sale / Acceleration clause - what about that???
Ignorant1,
you need to spend some time on this website. There’s more then enough information on DOS clause and asset protection.
My apologies for my ignorance (hence my membership name). I realize that there is a lot to learn here, and I am starting to dig through the archives so that I don’t ask redundant questions in the future…
That being said, it really looks as though this website contains some invaluable information, as well as is populated by some very knowledgeable individuals. I am looking forward to an accelerated education through this site!
It is true that this website has quite a few knowledgeable individuals, however, most people ask questions before even scanning through to see that their question has been answered many time before.
I’m very disappointed that many people that have transferred their properties into LLC do not share the information on how they did it and what the consequences were. You will find that a lot here.