Can You Transfer Your Property to an LLC If You Have a Mortgage on the Property?

You should know that just by transferring the title of your property to an LLC does not automatically transfer the mortgage on the property. You are still personally liable for the mortgage payments according to your mortgage terms. In addition, many mortgages contain a "due on sale" clause, which means that if you transfer ownership of the property, your mortgage will be accelerated and you will be required to pay the full mortgage amount.

Therefore, if you want to transfer your property that has a mortgage, you should talk to your lender. Your lender may actually be willing to agree to transfer your title to the LLC if your lender can be assured that you will abide by the terms and pay the mortgage on time. Your lender could also require you to refinance the mortgage with the LLC as the borrower. It is also highly possible that you will need to sign a personal guarantee for the refinanced mortgage, because your LLC probably does not yet have an established income or credit history. Lastly, your lender may decide to exercise the due on sale clause and ask you to pay off the mortgage and seek new financing. Therefore, you should understand your lender’s attitude before you try to transfer the title.