Transfer Rental Property To LLC

If the deed of a rental property is in the hands of an individual or a household, then it may be a good decision to transfer that deed to an LLC instead.

When a property deed is listed as an individual asset, then all of that person's assets are at risk should a legal problem arise at that property.

If the rental is associated with an LLC, however, only business assets would be at risk if a lawsuit is filed against the property's owner.

The first step would be to form the LLC if you have not done so already.

Every jurisdiction has slightly different rules that must be followed, but you will need to complete an articles of organization.

You'll also need to list officers, file the articles once completed, and then pay the filing fees. Then you'll be ready to take the next steps.

Step #1: Create and Sign the New Deed

You'll likely need a property attorney to prepare a deed that is able to convey the rental property.

If you own the property already, then just sign this new deed that transfers the property to the LLC in the presence of a notary public.

Once your signature is on the document, then you'll be able to file with your jurisdiction's deed office.

If there's a mortgage on the property, your lender will need to approve the transfer, even if you're just sending it to your own LLC.

That's because most mortgage agreements require payment in full when a sale is made.

Step #2: Have a Bill of Sale

If there are any personal or business assets that will be transitioning with the rental property to the LLC, then you'll need to have a notarized bill of sale for these items.

Make sure you sign the titles to any property over to the LLC during the process and then file any necessary documents that may be required by your jurisdiction.

Step #3: Get Your Tax ID Number

Because you're upgrading your business presence to an LLC, you'll need a tax ID number and begin to filing taxes independently on your business income.

It also means that you'll need to completely separate business and personal finances and pay yourself an actual salary from the business instead of just taking profits from it.

The start of this process is to file for your tax identifications at all levels.

Make sure to transfer all of your names to the appropriate licenses as well.

Step #4: Consult With Professionals As Needed

There are numerous accounting and legal issues that can arise with an LLC that is based on rental property.

Although the LLC will protect your personal income, there will be a greater investment into professional consultations for issues that can come up over time.

Grow relationships with your local professionals and you'll be able to consult with them when needed if you've got a problem to solve with your LLC.

Posted on Sep 19, 2014


Most Important Landlord Tenant Laws in Texas

When it comes to having a tenant for the first time, it can be pretty daunting because you are going to be the corresponding landlord and a new relationship will emerge, which will need time to grow... More

The Landlord Tenant Laws in California

The landlord and tenant laws in California are literally the same as they are in any other state. These laws, rules and regulations are put into practice because they uphold an order, a discipline,... More

Understanding the Landlord Tenant Laws in Illinois

People are aware that there are different rulings in each state with reference to the landlord/tenant laws. The state of Illinois also has a set of laws. These rules and regulations are basically... More

The Landlord Tenant Act: What Landlords Need to Know

All landlords know that before they can formally become a landlord there are a lot of things they need to understand. Landlords and tenants cannot act as such without any legal bodies involved. That... More

Essential Tenancy Agreements that a Landlord Should Have

When entering into an agreement with a potential tenant, a landlord needs to fully understand the contract that binds them into the specific relationship of being a landlord and a tenant. Now that the... More

Landlord Rights

If you’re currently considering the option of offering one of your properties for rental purposes, you should first educate yourself about the landlord tenant relationship. For the first timers, it’s... More

Holdover Tenancy: What is a Holdover Tenant?

Landlords have many things to think of; they have to deal with legal issues, privacy issues, and so much more. Above all, they sometimes need to deal with a problem tenant. The interesting thing is... More

What is a Tenant Estoppel Certificate?

Most landlords may have some idea what an Estoppel Certificate is. However, many aspiring landlords are still unaware of what this certificate is all about. Basically, a tenant Estoppel Certificate is... More

How to Issue a Tenant Warning Notice

Landlords have a lot of administrative work to do when they have tenants. It seems easy to let people come and live in your home, have them pay the monthly rent and carry out your daily activities.... More

Tenancy Sufferance and Tenancy Lease Agreements Myths and Facts

There are a whole bunch of myths about lease agreements that most people believe that are simply not true: You can't rent a property without lease agreement – Actually there are laws in every state... More