Transferring Property to an LLC: Don't Fear the Due On Sale Clause

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Mauricio Rauld, Ken McElroy's Legal Advisor, breaks down the concept of the "due on sale" clause in loan agreements. Mauricio addresses common fears surrounding the clause and sheds light on its history, impact, and why most borrowers shouldn't worry about its impact. Check out Mauricio’s channel: / @mauriciorauldesq
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Опубликовано:

4 окт 2024

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Комментарии : 25

@bradkruger3445 Год назад

Finally a straight answer on this all too common question. Thank you

@MauricioJRauld Год назад

Thank you!

@charleskramer1120 Месяц назад

due on sale clauses originated from interest rate spikes, but not the huge one of the early 80s. These clauses began to appear in the late 1960s in response to interest rate spike at that time, and were regularly challenged in court, often successfully, as being an illegal restraint on alienation. The matter was pretty much settled by federal law in 1982 with the passage of the Garn-St Germain Act.

@CraigKammanMN Год назад

Thanks for siting the Fannie and Freddie rules on that, I was unaware they had those guidelines in place. I just thought the low risk was banks don't look unless you are delinquent on payments.

@MauricioJRauld Год назад

Yup.

@elizabethohnesorge5861 Год назад

Thank you, wonderful information.

@MauricioJRauld Год назад

You are welcome

@yeahjug03 Год назад

Extremely informative. Thank you

@aceofslayz Год назад

Thanks for the valued content.

@eliknapp8412 Год назад

Great info thank you so much

@MauricioJRauld Год назад

My pleasure

@izetsalihbegovic115 Год назад

Reason why Pace M did not have issues is the chart that you have shown. Rates were going down so it was not in interest of the banks to invoke the clause. If rates were going up then they will, just as they made sure clause is there during the 80's.

@MauricioJRauld Год назад

Don't know if that is the reason, BUT, I agree with you re the larger premise. I've actually mentioned that in prior videos. But my main point is that is still a different scenario as to when you transfer to your own entity and as long as the Fannie and Freddie guidelines remain in place I dont beleive its an issue. Thats what we really need to keep an eye out for.

@luisgil3034 Год назад

Absolutely amazing! Thank you guys.

@Izzy-uf5rd 5 месяцев назад

Hi Mauricio / Ken, so I understand the property is deeded over to the LLC. How about the Mortgage? Does the mortgage remain under the person's name or is it moved to the llc as well? Did you have a video on the types of Deeds and which one would be best for this situation? Awesome video!

@craigslist8011 Год назад

What happens if the originally borrower wants to transfer the property into an LLC but add someone else as a 50% owner in the LLC? So original borrower would be 50% and another person not on the loan would also be a 50% borrower.

@MauricioJRauld Год назад

That changes things. I would argue that becomes more like scenario 1

@farrukh.rasheed Год назад

Why not obtain mortgage directly in LLC name, i.e. buy through LLC?

@hlehman1987 Год назад

Most banks won’t extend as desirable lending terms to an LLC as they will to an individual.

@MauricioJRauld Год назад

For commercial loans, yes. But for SFH or 1-5 they typically want to lend to an individual. Maybe a community bank will do into an LLC but terms not as favorable.