Does my LLC protect me and my wife on the joint property?

[switchex]

What is the name of your state? MD

I have a rental property which i would like to setup as LLC.
The propery is owned by myself and my wife. When forming the LLC, do I need to include both my wife as well as my name some where on the form? I just want to make sure that I am not in a situation where I can not be sued but they can turn around and sue my wife.

The department of taxation in Maryland, has an online form that one can use. The form is different than those i have seen from other states. It has a line for signature of "Resident Agent", and a line for Signature of "Authorized Person". Does anyone know who the authorized person(s) are? Is this where for example I can enter my wife's name?

Please look at the form: http://www.dat.state.md.us/sdatweb/artorgan.pdf

Thanks for all your help.

 

[JoshDom1898]

If you quitclaim the property you already own to your LLC, then you will be in breach of the deed of trust (or mortgage) because there's probably a "no assignment" clause within that contract unless you get lenders prior written approval.

So to answer your question, yes you will be more protected in terms of a LL/tenant relationship but no, you will have committed a breach of contract and a fraudulant conveyance in terms of your contract with your lender.

You are essentially exchanging one form of protection but exposing yourself to another.

 

[HomeGuru]

What is the name of your state? MD

I have a rental property which i would like to setup as LLC.
The propery is owned by myself and my wife. When forming the LLC, do I need to include both my wife as well as my name some where on the form? I just want to make sure that I am not in a situation where I can not be sued but they can turn around and sue my wife.

The department of taxation in Maryland, has an online form that one can use. The form is different than those i have seen from other states. It has a line for signature of "Resident Agent", and a line for Signature of "Authorized Person". Does anyone know who the authorized person(s) are? Is this where for example I can enter my wife's name?

Please look at the form: http://www.dat.state.md.us/sdatweb/artorgan.pdf

Thanks for all your help.

**A: the short answer is NO.

 

[switchex]

Thanks for the replies.

Josh, are you saying that my lender will object to me setting up my rental property as an LLC? why? I know many people that have homes that rent them out . .and many of which have it as an LLC .. so you think they all have approvals from lenders or they just did so without knowing. .... This was actually suggested by my accountant, and she did not mention anything about my lender!!!!!!

What can my lender do if they find out I have set the property as an LLC?

Thanks.

 

[HomeGuru]

Thanks for the replies.

Josh, are you saying that my lender will object to me setting up my rental property as an LLC? why? I know many people that have homes that rent them out . .and many of which have it as an LLC .. so you think they all have approvals from lenders or they just did so without knowing. .... This was actually suggested by my accountant, and she did not mention anything about my lender!!!!!!

What can my lender do if they find out I have set the property as an LLC?

Thanks.

**A: your accountant is an idiot.

 

[switchex]

HomeGuru,

I just called my bank and confirmed that i can not do so! so i guess my accountant is an idiot .. she seems to be so good and knowledgeable with tax stuff!!! now i am worried!

Is this one of those things that people do, knowing that it is a breach of contract? What is the risk involved if the bank finds out? will there be a fine or will they simply take thier money away or increase the interest rate?

 

[HomeGuru]

HomeGuru,

I just called my bank and confirmed that i can not do so! so i guess my accountant is an idiot .. she seems to be so good and knowledgeable with tax stuff!!! now i am worried!

Is this one of those things that people do, knowing that it is a breach of contract? What is the risk involved if the bank finds out? will there be a fine or will they simply take thier money away or increase the interest rate?

**A: some know and some have no clue. There is a due on sale or transfer clause in almost all mortgage documents. That clause prohibits any mortgagor from transferring interest to another, even an LLC. If the lender finds out after, they can call the loan due.

 

[JoshDom1898]

here's a clue, knowing about taxes and knowing about the law is different.

Q: Is this one of those things that people do, knowing that it is a breach of contract? What is the risk involved if the bank finds out? will there be a fine or will they simply take thier money away or increase the interest rate?

A: Yes, it is one of those things people do that is hush hush and on the downlow because it is a breach of contract. The risk is if the bank finds out they can sue you and declare the balance of your loan due immediatley (including attorneys' fees and costs). They can also foreclose on the property. So if you owe $270k on your property, they can say give me all $270 tomorrow or they'll foreclose.

You obviously don't understand real estate. A mortgage (or d/t) is essentially security for the lender to ensure you pay back the loan. What good is their security (the mortgage or d/t) if you give title away to another entity, thereby legally you don't own the property?

Then their security blanket essentially goes out the window, so no duh they won't let you assign the title to another entity. Now however, they can still take the property from the LLC and sue the LLC as well as you individually.

Good luck, maybe you should spend $300 and talk to an attorney for an hour before signing on the dotted line? Maybe?

 

[HomeGuru]

**A:

here's a clue, knowing about taxes and knowing about the law is different.

Q: Is this one of those things that people do, knowing that it is a breach of contract? What is the risk involved if the bank finds out? will there be a fine or will they simply take thier money away or increase the interest rate?

A: Yes, it is one of those things people do that is hush hush and on the downlow because it is a breach of contract. The risk is if the bank finds out they can sue you and declare the balance of your loan due immediatley (including attorneys' fees and costs). They can also foreclose on the property. So if you owe $270k on your property, they can say give me all $270 tomorrow or they'll foreclose.

You obviously don't understand real estate. A mortgage (or d/t) is essentially security for the lender to ensure you pay back the loan. What good is their security (the mortgage or d/t) if you give title away to another entity, thereby legally you don't own the property?

Then their security blanket essentially goes out the window, so no duh they won't let you assign the title to another entity. Now however, they can still take the property from the LLC and sue the LLC as well as you individually.

Good luck, maybe you should spend $300 and talk to an attorney for an hour before signing on the dotted line? Maybe?

**A: why would a lender want $270 or threaten to foreclose?

 

[JoshDom1898]

They can do either. I think it just comes down to a business decision for them. Which route is easiest to get the money they are owed.

 

[HomeGuru]

They can do either. I think it just comes down to a business decision for them. Which route is easiest to get the money they are owed.

**A: read my post again please.