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Transfer Rental Property to LLC in MI

Grand Blanc, MI |

I have a rental property in MI and want to transfer to an LLC. How do I do this and take my chances with the mortgage being called on the due on sale clause being activated. Renting out the home was just as much a breach of the contract as would be the warranty or quitclaim deed being filed for transfer to an LLC. What are the steps to take to do this on my own. I am not worried about doing this myself. If they call the mortgage and I don't pay, I assume they just foreclose? Thanks.

Attorney Answers 3


  1. Best answer

    Is there a prohibition on renting property in your mortgage? If not you can request a waiver of due-on-sale from your lender, otherwise not. By the way, Lenders may have monitoring services that will turn this up. If you do risk just deeding it use a warranty deed rather than Quit-claim Deed so your title insurance doesn't expire, and file a Property Transfer Affidavit with the Assessor of your municipality.
    If your motivation to get property into LLC in liability, best advise to have adequate insurance liability coverage.
    Finally yes it will foreclose after payments seriously behind, but you would have at least a 6 month redemption period after the foreclosure sale.
    I think you should consult with attorney on these issues.

    The above answer is generalized reply to an question and is not intended to be legal advice or establish an attorney-client relationship with you. If necessary you should meet with an attorney and provide the attorney with all relevant documents and get an attorney opinion or advice on your situation.


  2. It would help to know why you want to do this. It may be possible to execute a deed that would reserve a life estate to you, and have the property pass to the LLC, upon your death. This would not violate the terms of your mortgage and would not trigger the due on sale clause.

    This would be done through a special type of quit claim deed.

    James Frederick

    *** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.


  3. You are correct.. transferring the home via a deed could trigger a due on sale clause... just as renting the home could also trigger it. However, many people whose homes are underwater do this to move.. and the LLC is for liablity protection. Yes a mortgage co would just forclose.. but generally if you are keeping the house payments current.. they have soo many non-performing loans that they do not bother.

    So generally just quit claim the house to a LLC and take your chances.

    That said.. if you have lived in the house 3 of the last 5 years I believe there may be tax advantages if you sell or refinance.. check them out before you do this or you might loose and opportunity.

    Please note that I answered this question with general knowlege of the law and with limited disclosure from you, my answer does not create an attorney-client relationship and I cannot be held responsible for how you, the asker, use the information provided. If you want to contact me directly and retain my services you may through my listing on this site or at 248-901-0750 or james@weineresq.com.

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