These homes were purchased with a home equity loan along with mortgages on 2 individual properties. These loans along with the deeds are in our personal names. Would this be a problem with some things in corporation name and some in personal name, along with taxes.
thank you
The main purpose of an LLC is to insulate its owners from personal liability should something happen at one of the properties owned by the LLC. The issue is you have already taken mortgages out on 2 of these properties and I suspect that there is language in the security instrument (the mortgage) that may not permit you to transfer the deed to another with out assigning the mortgage legally. There may even be a "call provision" which would allow the lender to accelerate the loan if you do make such a transfer. You would need to consult with an attorney in VA and have them review the mortgage documents to determine if that is the case.
In regards to the other 2 homes you can make such a transfer but depending on the County's transfer tax policy you may have to pay a minimal amount to make the transfer.
Transferring the title is easy. You would sign a quitclaim deed from yourself to your new entity. You would also want to coordinate the recording of the deed with a title company and have them issue the new title insurance policy in the name of the LLC. You don’t want to transfer title to the LLC and later find out that there is a title problem with the property and not have title insurance coverage for your issue.
Lastly, if you do make such a move make sure you are operating the LLC as its own entity and not treating it as an extension of your person. You should make sure it has its own bank accounts, insurance, etc... etc... The purpose of the LLC is to shield liability, that shield is only viable if you operate it as it is supposed to be operated. But this is for a different question.
You also may want to consider keeping the properties in your own name and make sure you have sufficient insurance to cover yourself in case anything goes wrong with them. Essentially getting an umbrella policy to cover something horrible.
In the end, certainly consult with a local attorney before doing anything. I know many local Title Companies owned by Attorneys in Richmond that can help if necessary.
The prior response was very thorough, but there are a couple other issues to consider - and these are likely thing you will discuss with the attorney when setting up the LLC. First, you should consider whether to use a single LLC to hold all the property, or whether to set up multiple LLC's. The benefit of multiple LLC's is it further decreases your liability exposure in the event of an accident at any single property. The downside is it is more expense to set up, more expensive to operate, and more time consuming to operate.
Second, I would consider contacting your insurance carrier and having them add an umbrella liability policy that covers your home, autos and LLC's. This is additional protection which can help in the event of a catastrophe, and the addition of this coverage may make you comfortable using a single LLC rather than a multiple LLC structure.
Lastly, I notice you used the word "we" in your question. The presence of multiple owners brings up many additional issues and you should consult competent tax counsel. You may have to file Form 1065 on an annual basis (and additional expense), and you should have an operating agreement in place to control the relationship of the members and disposition of membership interest in the event of death, divorce, bankruptcy, etc.
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