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If I want to convert rental property to LLC in Fairfax Virginia.

what is the best procedure...
If I want to convert rental property to LLC in Fairfax Virginia. what is the best procedure?
I presume lender of mortgage for the property will need to be notified to put the deed to the business entity.
Is it better to go through attorney vs cpa for the above set up?
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Answered in 11 minutes by:
8/20/2013
Barrister
Barrister, Attorney
Category: General
Satisfied Customers: 39,577
Experience: 17 years practicing attorney, Realtor, 26 years landlord
Verified
Hello and welcome! My name is XXXXX XXXXX I will try my level best to help with your situation or get you to someone who can.
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What state is this in?
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Are you just wanting to make sure the property is owned by the LLC rather than you personally?
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Have you already set up an LLC with the Sec of State and filed the proper paperwork?.
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Thanks
Barrister
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Customer reply replied 4 years ago

in virginia. Not yet set up an LLC in the state or federal level, just started talking w/ my cpa.

Is it better to go through attorney vs cpa for the above set up?
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You can get and file all the paperwork yourself, so there is not really any need to get an attorney or CPA involved at this point. The CPA would be able to assist around tax time or with advice on business deductions you could claim throughout the year..

Your first step would be to actually file the paperwork with the VA State Corporation Commission to officially form the LLC and get it registered. It is a fairly simple process and the VA Corp Commission has all the forms you need here:
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http://www.scc.virginia.gov/clk/dom_llc.aspx
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Once you have formed the LLC and filed the paperwork, then you would just need to have a deed prepared by a local real estate attorney from you as grantor to the LLC as the grantee to transfer the property into the LLC and legally make it the owner.
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Thanks.

Barrister

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If you need further help, just reply to me via the “REPLY” button and I will be happy to continue.

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I cannot enter into an attorney client relationship as this is a public forum. The information provided is not a substitute for a local attorney’s legal advice.

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Customer reply replied 4 years ago

Thank you for your reply.



I still pay mortgage on the property. Would I need to ask the mortgage company for the deed transfer?
How about insurance, should it have LLCs name under it and include rental insurance.

From a purely legal perspective, if you tranferred the property without the permission from the lender, they have the right to call the note due if there is a "due on transfer" clause in the mortgage.
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However, in 13 years of real estate practice, I have never seen a lender exercise this right as long as someone is paying the mortgage. The reason being is they don't care who the property is titled to because it always remains as collateral subject to the mortgage.
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So technically you should ask, but if you didn't and just transferred it, I would opine that it is incredibly unlikely that the lender would take any action.
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As for insurance, it should be carried by whatever entity the property is titled to. If it is transferred to the LLC, then it should carry the insurance.
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Thanks
Barrister
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Customer reply replied 4 years ago

Now a basic question:


For someone with couple properties


Is it worth going through above process to transfer to LLC to protect yourself and family VS


just making sure have proper insurance coverage;


 


If going through LLC route then would you recommend forming LLC for each property?

Honestly, I have been a landlord for over 24 years and just keep a million dollar umbrella liability policy on all my properties as I don't feel a need to have an LLC. I understand why people put properties in LLCs, and it is prudent, but you are correct in that an insurance policy will serve to protect you as well.
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As for having an LLC for each property, that gets in to a lot of filing paperwork each year and I think it is a bit of overkill. Now if you are talking about different 20 unit apartment buildings, it might make more sense. But if you are talking about single family rentals or a couple duplexes or four plexes, probably not.
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Thanks
Barrister
Barrister
Barrister, Attorney
Category: General
Satisfied Customers: 39,577
Experience: 17 years practicing attorney, Realtor, 26 years landlord
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Barrister
Barrister, Attorney
Category: General
Satisfied Customers: 39,577
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Experience: 17 years practicing attorney, Realtor, 26 years landlord

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