Acquiring investment property in an LLC structure is preferable, but if you own a farm or ranch in your own name and wish to transfer the property into a personal LLC, the process is fairly straightforward.
Series LLC’s are the preferred entity structure in Texas for holding investment property.
- Series LLC’s are a great tool available to those starting their real estate investment companies in Texas. With a Series LLC, you’re able to separate different properties into singular LLC’s without the need to file new LLC paperwork for each property. For more on the benefits of Series LLC’s, Click Here.
- After forming your entity, consider whether the property you are transferring has any existing debt, such as a mortgage or promissory note. The first call you should make is to the holder of the note and run the plan by them. 99% of the time, there will be no issue, but many mortgages and promissory notes contain “due on sale” clauses, where if the property is transferred, the amount of the debt may become due immediately. For more on transferring the property with existing debt, Click Here.
Never Use a Quitclaim Deed to Transfer Your Property Into Your LLC - For whatever reason, a lot of people see Quitclaim Deeds as “Quick Deeds” and think that they will be the simplest vehicle to transfer their property. However, as any attorney you talk to will tell you, Quitclaim Deeds should almost never be used; Many title companies will not consider Quitclaim Deeds to be actual deeds, and require a Warranty Deed be obtained. Warranty Deeds transfer the property with a guarantee from the Grantor regarding the status of title and guarantees the title against any defects, and as such is the much more preferrable property transfer vehicle.
Record the Deed. Once you have drafted the deed (Click Here to see what constitutes a valid deed in Texas), you will need to record the deed in the County Clerk’s office. Make sure that the Deed language is directly copied from the previous deed as far as the exceptions to the warranty or other exclusions.
If you are thinking about transferring your property into an LLC, or need to start a new LLC to acquire investment property, The Law Office of Nathaniel Gilbert can help. San Antonio Real Estate Attorney Nathaniel Gilbert works with clients to create entity structures to hold and protect your assets and shield you and your family from liability. Contact Nate today for a free consultation on your Real Estate Venture!
