State Specific Question About: OREGON (OR)

I am interested in renting a home that I am currently purchansing with a home mortgage. I have been given the advice that creating an LLC will help protect my personal assets by keeping them seperate from my rental property.

I reviewed my home mortgage agreement, and it states that "if all or any part of the property or any interest in the property is sold or transferred without lenders prior written consent, lender may require immediate payment in full of all sums secured by this security instrument. However, this option shall not be exercised by lender if such exercise is prohibited by applicable law".

I understand that it is common practice by many to purchase a house with a conventional home mortgage and then transfer it into an LLC. Also the people I am working with (attorney/property manager) have not heard of any mortgage company to require someone who has transfered their loan to an LLC to pay off their loan.

I have talked with the mortgage company and the best they could do it tell me to write a letter to their "correspondence department" and wait 4 weeks for a response. The manager I spoke with did say that the loan is intended for individual owners and not for companies and that he suspected that they would not allow the mortgage to be tranfered into and LLC.

Does anyone have any recommondations?

Thanks for your help. John

Your main reason for creating the LLC is the largest flaw in the plan and will offer you little or no protection.

The transfer would initiate a DOS, and you probably don't want to be looking for a loan in this environment.

Buy yourself a 1 million dollar umbrealla policy and sleep well.

Sean

Oh GAWD.. Here we go again :-)

Hi Honey..

Can any of you point me in the right direction to do research on the LLC. How about any specific information for here in Oregon.

The property is single family residential that I would like use as a rental.

My main question really has to do with the statement I showed on my mortgage agreement, which says "if all or any part of the property or any interest in the property is sold or transferred without lenders prior written consent, lender may require immediate payment in full of all sums secured by this security instrument. However, this option shall not be exercised by lender if such exercise is prohibited by applicable law".

Does anyone have any information on this, and if by creating an LLC, what are the laws that apply.

Thanks, John

Try Albert Aiello. Goldmine tax system. Look it up online. He talks about LLC's and says they are very powerful if set up correctly. The key is not have a sole owned LLC. That they are worthless when set up this way and it's child's play to "pierce the corporate veil".

Most do not know how to set up a LLC correctly Al says.

You are in the big pond of RE. You could benefit a lot by using his system John.

If you already know about Al and his tax system time to review and look for your answers there. They are there I have read them just recently. In fact last night.

.

All very due respect to my friend Josh.. Never, and I mean NEVER, take legal advice from a CPA.

I think Al is ok too.. But a legal mind with regard to liability, he clearly is not.

Transferring title to an LLC will trigger the due on sales clause of a mortgage. No bank is going to call a performing loan in this market.

The bank isn't going to allow you to transfer the loan into the LLC. You signed personally on the loan and that's the way it will stay irregardless. However, you can transfer title to the LLC and like others have said, it's highly doubtful they would invoke the DOS clause for this. Also make sure your insurance company lists the LLC as an additional insured.

"And just fyi, the loan will disappear from your personal credit report."

John, the deal is once you breach your agreement and transfer it from your name, then the note holder can call it at any time. Will they do it? They could go from now on and never do it ....or do it right after the transfer. It's a calculated risk.

I went thought the precise thing you are and decided not to fool around with the LLC option due to many reasons. But one of the biggest reasons I'll never breach any term of a mortgage agreement is to "prevent" the note holder's ability to call the loan. Why??

Right now my interest rates are all at or below 6%; I am in this for the long haul with 30 year loans. At some point during those 30 years, rates may very well be above 10% again. If I transfer a property without permission, then the note holder has every right to call the loan at which time I would have to negotiate with the note holder or get a new loan....at 10% or above.

So there's the one risk that stops me cold. It will be in OR's laws too, probably contract and RE law. I've read up on many FL laws and it's time consuming so I doubt you're going to have anyone quote the precise statute. If I were you and dead set on breaching the agreement, I would read up on the precise statute before doing so. The RE guru's will lead you down roads you really do not want to go. We see that here all the time.

Now saying all that, do not listen to the supposed RE guru's. They're just trying to make money and could care less if you're set up correctly. Go to a "local" tried and true asset protection attorney to get it done properly. The absolute worst position to be in is in a plan where you think you're protected but are not. It happens all the time.

Steve,

I'm just passing along my own experiences, but it doesn't sound crazy to me.

When I had properties and mortgages in my own name, the loans were on my credit report. Shortly after I transferred those properties and loans to an LLC, the loans no longer appeared on my credit report.