Legal Question in Real Estate Law in New Jersey

Re: Property Transfer to LLC

The lender is under no obligation to chnge the mortgage. Technically, you cannot change the Deed without being in violation of the mortgage and note. However, if your LLC was under your own name, i.e. John Doe LLC, it would be such a minor point, I doubt you'd have much difficulty. I assume you are using a Family Limited Partnership (FLP) in LLC format for estate planning. We have frequently done deed transfers to trusts where the trust is the in the name of the same person, and never had a problem. Also, feel free to go as high up in the new lender's hierarchy as possible. Always get the name of the person you are speaking with, and go over their head. Also, your loan broker might still have some pull, since his company sold the loan and he will want referrals and future business from you. Finally, consider refinancing, unless the rates are that much higher at present than your current rate.

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Re: Property Transfer to LLC

Typical catch 22 of probably using a mortgage broker. I suggest contacting both the original lender who approved the transfer and having them try to intercede (they may be able to assist). This is particularly so if you have their approval in writing, dated before the date they sold the loan. You might also contact the legal department of the new lender and try to get them to approve the transfer. Try talking to the highest official of the new lender also, explaining what happened. If there is equity in the property, plus adequate insurance, personal guaranty, etc., it should not be a problem. They have the mortgage, it will still be in place, and they might consider it if all members of the LLC agree to issue personal guarantees. While they are under no obligation to do so, there could be the moral issue of having been approved for the transfer prior to the sale of the mortgage. You might even consider a complaint to the banking department in Trenton. They might intercede. Finally, since this is investment property, you could consider refinancing the mortgage. Be sure the potential new lender knows about the proposed transfer to the LLC or family partnership. What you are considering is not unusual and occurs frequently. Several major banks will allow having the LLC as an owner. A refinance might cost money, but the end result may be more economical. Both personally and for clients I have used LLC's for investment property without problems in the financing. You might even get a lower mortgage interest rate. Good Luck. If you need any information on banks that will consider this, or just need to talk about the proposal, contact me at 973-377-3313 or e-mail me.