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| CRE Online > Real Estate Law > Bill Bronchick > Question and Answer |
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Question by Bobby Iordanescu:
I currently own a home that I purchased with a VA loan.. I've been living in the house for about 2 years and I'd like to rent it out and transfer it to an LLC. What do I need to do at this point? I took ownership of the house in my name and I'm not sure how the VA views the transfer of property into an LLC. Would I be better off trying to refinance with a conventional FHA lender to get out from the VA note? Answer By William Bronchick: If you transfer title to a corporation, LLC or other entity, the lender may, at its option, call the loan due and payable. Then again, maybe it won't. Chances are, so long as the payments are made, they won't. No lender wants a property back without equity. If you sell it on an installment land contract to an LLC, they cannot call the loan due, since title has not passed (the VA regulations state that a contract for deed or installment land contract will not trigger the due on sale). Another way to get around the due on sale issue is to transfer title to a revocable living trust. The lender cannot call the loan due for transferring title to a trust for your own benefit. When the dust settles, you assign your trust interest to an LLC. The lender does not discover this transfer if you don't say anything, since it is not publicly recorded. Disclaimer: The foregoing is not intended to be given as legal, financial or tax advice, but intended for instructional use only. If you require legal, financial or tax advice you should seek the assistance of a qualified professional.
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