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Lucy, Esq.
Lucy, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 28417
Experience:  JA Mentor
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We have a rental house that we quitclaimed into an LLC. We

Customer Question

We have a rental house that we quitclaimed into an LLC. We forgot to return the house back to our names before we signed a contract to sell and signed as though we are the legal owners as individuals. Can we quitclaim the house back into our names to remedy the situation, then terminate the LLC?
As soon as the house is back in our names, then are we okay with the contract?
Submitted: 7 months ago.
Category: Real Estate Law
Expert:  Lucy, Esq. replied 7 months ago.

Hi,

I'm Lucy, and I'd be happy to answer your questions today.

Technically, the contract is invalid because you do not own the house. The best way to protect yourself would be to sign a new contract where it's the LLC agreeing to sell the property to the buyers. That allows you to keep the LLC's assets separate from your own, and then you could still wind up the LLC after the sale by using the proceeds to pay any debts and then distribute the assets to the owners.

One of the primary reasons people create LLCs is so they cannot be personally sued for LLC debts and the LLC cannot be sued for personal debts. Transferring assets back and forth at will between the LLC is the fastest way to lose that protection. So you could run into problems by just quit-claiming the property to yourselves as individuals if you're not planning to buy it from the LLC.

Customer: replied 7 months ago.
We understand that the contract is invalid the way it is written and we understand what an LLC is. The property has no debts. Will quitclaiming the property back into our names be all that is necessary to legally sell the house (remedy the situation) to this buyer?
Expert:  Lucy, Esq. replied 7 months ago.

It could resolve the situation, yes. I just wanted to let you know that it could also create other problems, since I don't have all the facts of your situation. If you have no creditors and no one else trying to buy the house from the LLC or lay a claim to it, you likely will not have any problems.