Transferring Property to an LLC: Don't Fear the Due On Sale Clause
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- Опубликовано: 9 авг 2023
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Mauricio Rauld, Ken McElroy's Legal Advisor, breaks down the concept of the "due on sale" clause in loan agreements. Mauricio addresses common fears surrounding the clause and sheds light on its history, impact, and why most borrowers shouldn't worry about its impact. Check out Mauricio’s channel: / @mauriciorauldesq
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Finally a straight answer on this all too common question. Thank you
Thank you!
Absolutely amazing! Thank you guys.
Extremely informative. Thank you
Thanks for the valued content.
Thank you, wonderful information.
You are welcome
Great info thank you so much
My pleasure
Thanks for siting the Fannie and Freddie rules on that, I was unaware they had those guidelines in place. I just thought the low risk was banks don't look unless you are delinquent on payments.
Yup.
Reason why Pace M did not have issues is the chart that you have shown. Rates were going down so it was not in interest of the banks to invoke the clause. If rates were going up then they will, just as they made sure clause is there during the 80's.
Don't know if that is the reason, BUT, I agree with you re the larger premise. I've actually mentioned that in prior videos. But my main point is that is still a different scenario as to when you transfer to your own entity and as long as the Fannie and Freddie guidelines remain in place I dont beleive its an issue. Thats what we really need to keep an eye out for.
Hi Mauricio / Ken, so I understand the property is deeded over to the LLC. How about the Mortgage? Does the mortgage remain under the person's name or is it moved to the llc as well?
Did you have a video on the types of Deeds and which one would be best for this situation?
Awesome video!
What happens if the originally borrower wants to transfer the property into an LLC but add someone else as a 50% owner in the LLC? So original borrower would be 50% and another person not on the loan would also be a 50% borrower.
That changes things. I would argue that becomes more like scenario 1
"Do" or "Due"?
Due. But misspellings happen when you are being real.
Due
Why not obtain mortgage directly in LLC name, i.e. buy through LLC?
Most banks won’t extend as desirable lending terms to an LLC as they will to an individual.
For commercial loans, yes. But for SFH or 1-5 they typically want to lend to an individual. Maybe a community bank will do into an LLC but terms not as favorable.
Don’t transfer!
You can avoid all of that with a lease option / purchase agreement!
Then the seller retains all the liability which not sure they want, right?