Transferring Property into Entity Structures

The most common method for transferring property into an LLC is a quitclaim deed, which conveys the grantor's interest without warranties of title. For transfers between an individual and their wholly owned LLC, a quitclaim deed is sufficient because the transfer does not change beneficial ownership—the same person controls both the grantor (themselves) and the grantee (their LLC). Some investors prefer a warranty deed for the additional title protection, but this is generally unnecessary for same-owner transfers. The deed must be recorded with the county recorder's office (recording fees typically $25-$75) and should include the full legal description of the property, the grantor's name exactly as it appears on the current deed, and the grantee LLC's full legal name and state of formation.

Most mortgage contracts contain a due-on-sale clause (authorized by the Garn-St. Germain Act of 1982) that allows the lender to call the loan due in full if the property is transferred without consent. However, the Garn-St. Germain Act exempts transfers to inter vivos trusts where the borrower remains a beneficiary—and most lenders extend this practical tolerance to transfers into borrower-owned LLCs, especially when the borrower remains personally liable on the note. The risk is not zero: a lender could technically call the loan. Mitigation strategies include: (1) notifying the lender before transfer and requesting written consent, (2) transferring into a land trust first (which is clearly Garn-St. Germain exempt) and then assigning the trust's beneficial interest to the LLC, (3) timing transfers after refinancing when the loan is new and the lender relationship is fresh. In practice, due-on-sale acceleration on investor-owned property transfers to their own LLCs is extremely rare—but documenting the lender notification protects against future disputes.

After recording the deed, complete these follow-up items: (1) Update the property insurance policy to name the LLC as the insured and add the individual as an additional insured. Failing to update insurance can result in claim denial. (2) Update the property tax records with the county assessor—some jurisdictions reassess value upon transfer (check local rules). (3) Notify the mortgage servicer of the entity name now on title. (4) Update all leases to reflect the new landlord entity (existing leases remain enforceable, but new leases should name the LLC). (5) Redirect all rental income deposits to the LLC bank account. (6) File any required transfer tax or documentary stamp tax (varies by jurisdiction—some exempt same-owner transfers). (7) Update the LLC's Operating Agreement to list the property as a company asset.