DFW REI Club

 Dallas/Fort Worth Real Estate Investor Club

Deed Question

  • 12 Oct 2020 10:50 AM
    Message # 9299037

    I have some cash flowing properties that I recently refinanced and now I plan to hold them long term. I don't have Tax/Insurance ESCRO accounts on any of them. I would like to deed these properties to a Land Trust and make my LLC the beneficiary of that Trust.

    I am not asking for legal advise. Just opinions from experienced investors.

    Questions:

    1. Can simply filling out a new deed and recording it with the county accomplish this without creating a cloud on the title that might encumber a future liquidity event?

    2. Do I have to record the deed?

    3. Would such a move violate the Due on Sale clause of the mortgage?

    4. If so, how likely would it be for the underlying banks, assuming they became aware of the deed changes, to call the notes due?

    5. Would such a deed, once recorded, invalidate my property insurance policy? 


    Last modified: 12 Oct 2020 12:41 PM | rockne ardoyno
  • 13 Oct 2020 9:34 AM
    Reply # 9300993 on 9299037

    I am not a lawyer, here are my opinions:

    1. All transfers of property are done by recording a deed.  You would be doing nothing different than a title company would do. So, if done properly, it should not create a cloud on title.

    2. If you don't record the deed, there is no public record of the transfer.  You might be able to record it later, but this could raise a question, especially if you continue to operate the property under the previous owner.

    3. Strictly speaking: yes.  Most lenders' paperwork specifies that a change of ownership has to be approved by the lender.

    4. This is where most investors play.  Banks are usually happy as long as they get the payment.  But, I have had to refinance loans for investors when the loan was called.

    5. An insurance policy is a contract between two parties.  If the property is sold to a new owner, the policy needs to be updated to reflect the new party. I think most insurance companies will simply update the policy since you are still the main person in the Trust.

    I hope this helps,
      Neil Aggarwal
      Property Financing, LLC

    Last modified: 13 Oct 2020 9:35 AM | Neil Aggarwal
  • 13 Oct 2020 12:26 PM
    Reply # 9301293 on 9299037

    Thanks for taking the time to share your thoughts on this. Much appreciated.

  • 13 Oct 2020 4:18 PM
    Reply # 9301851 on 9299037
    Richard Kellett (Administrator)

    You can do all the above.

    Call me to discuss each one and how to accomplish.

    Dick Kellett

    817-915-0122


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