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What is the best way to restructure a rental property from JTWOS to a LLC?

Aurora, CO |

My wife and I have owned a residential rental property in Aurora, CO for 2 years. We purchased the home with an investment property mortgage and both the loan and home title are in our names. We would like to set up an LLC but are not sure how to proceed. Specifically, we are weary that a title transfer would require prior approval from our lender and could prompt them to call the note. Is there a way to structure the LLC to properly transfer risk and leave the existing loan in place?

Attorney Answers 1

  1. You are right to be concerned about triggering the due on sale clause of your loan agreement. Unfortunately, the dilemma can't be resolved through any specific structure of the LLC. Generally, to transfer the property to an LLC without triggering that clause you must get permission of your lender. Some lenders will approve the transfer while others will not.