If you’ve recently bought a property, you might be wondering whether you can transfer it into an LLC for liability or tax purposes. A common concern is: Will my lender call the loan due if I do that?
Most home loans include something called a due-on-sale clause. This means the lender has the right to require full payoff of the loan if the property is sold or transferred to someone else. Since putting a property into an LLC is technically a transfer, it’s reasonable to question this.
The good news is that, in many cases, you can move a property into an LLC without triggering that clause—especially if your loan is backed by Fannie Mae or Freddie Mac. But there are a few important guidelines to follow:
- You need to stay in control of the LLC
The LLC should be yours. Transferring the property into an LLC where you don’t have control could create issues. - You still have to follow your loan terms
Nothing about your loan changes. If you agreed to live in the home as your primary residence for a certain period (commonly 12 months), that requirement still applies. - Timing and loan type matter
These allowances generally apply to loans that meet specific guidelines, including when the loan was originated or sold. Most modern conventional loans fall into this category, but it’s always smart to double-check.
So, can you do it?
In many situations, yes—you can transfer your property into your LLC without automatically triggering a loan payoff, as long as you meet the requirements above.
One thing to keep in mind
If you decide to refinance the property later using a conventional loan, you’ll likely need to transfer the title back into your personal name. Most standard lending guidelines require the borrower—not an LLC—to hold title at the time of refinancing.
The bottom line
You’re not stuck—but you do need to be careful. If you own and control the LLC and continue to follow your loan terms, transferring your property is often allowed. Just plan ahead if refinancing might be part of your future.
