Warranty/quit claim deed (by Ryan [MN]) May 3, 2012 6:31 AM|
Warranty/quit claim deed (by John... [MI]) May 3, 2012 8:45 AM
Warranty/quit claim deed (by Larry [MN]) May 3, 2012 8:49 AM
Warranty/quit claim deed (by Kyle [IN]) May 3, 2012 9:14 AM
Warranty/quit claim deed (by Ryan [MN]) May 3, 2012 9:45 AM
Warranty/quit claim deed (by Virden [OH]) May 3, 2012 12:00 PM
Warranty/quit claim deed (by Mike45 [NV]) May 3, 2012 1:41 PM
Warranty/quit claim deed (by John... [MI]) May 3, 2012 2:32 PM
Warranty/quit claim deed (by Mike45 [NV]) May 3, 2012 9:25 PM
Warranty/quit claim deed (by Robert J [CA]) May 4, 2012 1:20 AM
Warranty/quit claim deed (by Ryan [MN]) Posted on: May 3, 2012 6:31 AM
I just purchased my first rental property and I have formed an LLC. There is a mortgage on the property in my personal name and I want to transfer it to my LLC. I am wondering if I am better off using a warranty deed or a quit claim deed? I am asking because I have heard rumors that by using a quit claim deed, the title insurance will be invalid, but by using a warranty deed, the title insurance will still be valid. Also, there is no clause in the mortgage papers that states that the mortgage is due in full when the property is transfered. --12.163.xx.xx
Warranty/quit claim deed (by John... [MI]) Posted on: May 3, 2012 8:45 AM
Do a search on LLC here and read the opinions. Is it just YOU in your LLC? In so, then it likely does not really offer you much and, in some states, will make it so that you can't represent yourself in court. And there is generally a lot of paperwork to keep it proper.
LLCs are intended to protect NON-managing partners. If you don't have those, then it might not be worth the hassle.
Warranty/quit claim deed (by Larry [MN]) Posted on: May 3, 2012 8:49 AM
You can't transfer the name on a mortgage without refinancing. The bank agreed to lend the money to YOU. Not an LLC. If you transfer the title into the LLC you will have to pay the registration tax again. I know that in MN it's likely going to be several hundred dollars. Plus you already paid it once when you purchased the property.
Bottom line you don't need an LLC. Get a personal liability umbrella policy and list the property in the umbrella. You can be covered for 1 million or more for a very low cost. I pay $150 per year. --71.193.xx.xxx
Warranty/quit claim deed (by Kyle [IN]) Posted on: May 3, 2012 9:14 AM
I agree the LLC likely doesn't provide the protection you would hope for.
As for your question, you purchased title insurance for yourself and the insurance will cover you forever on title validity claims against you. The title insurance, however, does not cover your LLC in any way. If there was a challenge to the title when your LLC owned the property, the LLC would have to take the claim back to you. If you quitclaimed it to the LLC, you have no liability. If you use a warranty deed the LLC has a claim against you and you can then file that claim with your title insurance. --71.194.xxx.xxx
Warranty/quit claim deed (by Ryan [MN]) Posted on: May 3, 2012 9:45 AM
From what I am reading, I might be better off leaving the property in my personal name and just get an umbrella policy. If that is the case, then what is the point of an LLC? I thought the LLC would enable a person to move the risk from myself personally. --12.163.xx.xx
Warranty/quit claim deed (by Virden [OH]) Posted on: May 3, 2012 12:00 PM
Ryan, the LLC is a lot of hoo-haa and hours of paperwork plus legal costs to do anything, if you have a lawyer spouse it helps lower the legal hassles. --184.59.xxx.xxx
Warranty/quit claim deed (by Mike45 [NV]) Posted on: May 3, 2012 1:41 PM
Kyle is correct, in major part. However, I am not sure if you can recover the title policy protection by having YOUR LLC file a claim against you under your policy, even if you do the transfer by a warranty deed. I haven't seen this issue challenged in court.
I don't think an LLC does any good at all. At least, I don't think it would do ME any good IN MY SITUATION. Your situation might be different.
Warranty/quit claim deed (by John... [MI]) Posted on: May 3, 2012 2:32 PM
Ryan: I answered your question about the point of an LLC in the first response here. They are intended to protect non-managing members in a multi-member entity. In my opinion, single-member LLCs are fairly pointless and primarily make money for lawyers and/or accountants. There are a few exceptions in some states, but they are rare, IMO.
Warranty/quit claim deed (by Mike45 [NV]) Posted on: May 3, 2012 9:25 PM
John [MI] is absolutely correct. Well, even if there is only one member, if he is not managing the investment but is passive, he might be protected. But those of us who are on this forum are hands on managers. An LLC would not help us.
Warranty/quit claim deed (by Robert J [CA]) Posted on: May 4, 2012 1:20 AM
You are playing with fire! I see that you want to protect yourself with an LLC. But imagine you have a problem at your rental property and call in a handyman to effect repairs. Something happens and you get sued.
Who do they sue?
1) Ryan, the person who contracted for the repair?
2) The LLC?
3) The owner of record on the deed?
4) Your insurance company?
5) The name the tenant pays the rent to each month?
In all of the above cases, the one thing that most landlord forget to do is CONTRACT WITH THEIR INSURANCE COMPANY TO HAVE THE POLICY PROTECT:
Them personally, their LLC, all co-owners and managers of the property.
You never know who is going to be named in a suit.
When I got sued by an x-tenant for unlawful eviction, the tenant named Me, my partners, my insurace company, my family trust, my partners LLC's and a Ficticious Business name -- all were named covered in my insurance "additional insured" so we didn't have a worry in the world. --173.55.xx.xx