Transferring real estate into a Limited Liability Company (LLC) is a smart move for many property owners — especially real estate investors, landlords, and small business owners. By placing property into an LLC, you gain liability protection, potential tax benefits, and enhanced estate planning options.
But how exactly do you transfer real estate to an LLC? In this guide, we’ll walk you through the legal, financial, and procedural steps to transfer real estate to your LLC the right way.
Why Transfer Real Estate to an LLC?
Before diving into the steps, here are some of the key reasons to transfer real estate into an LLC:
- Limited liability protection for personal assets
- Clear separation between personal and business property
- Simplified ownership for investment properties
- Estate planning and asset protection advantages
- Easier partnership management (e.g., multiple investors)
Keep in mind, while transferring real estate to an LLC has benefits, it may also trigger tax consequences or affect mortgage terms — so professional guidance is essential.
Step-by-Step: How to Transfer Real Estate to an LLC
Step 1: Form Your LLC
If you haven’t already, create an LLC in the state where the property is located. This includes:
- Filing Articles of Organization
- Choosing a business name
- Drafting an operating agreement
- Obtaining an EIN from the IRS
- Appointing a registered agent
Your LLC must be legally established before any property transfer can take place.
Step 2: Get Lender Approval (If Property Has a Mortgage)
If the real estate is mortgaged, you must get written permission from the lender before transferring the property to the LLC.
Why? Most mortgage agreements include a “due-on-sale” clause, meaning the full loan balance may become due if the property is transferred without approval.
Tip: Consider refinancing the mortgage in the LLC’s name or discussing alternative options with your lender.
Step 3: Prepare a Property Deed
You’ll need to execute a new deed that transfers ownership of the property from your name (or previous owner) to the LLC.
Common types of deeds used:
- Warranty Deed: Offers full protection to the buyer
- Quitclaim Deed: Simplifies transfer but provides no title guarantee
- Special Warranty Deed: Limits guarantees to the seller’s ownership period
The deed should include:
- The legal property description
- Names of the current owner(s) and the LLC
- County and state of the property
- Signature(s) of the grantor(s) (the person transferring the property)
Step 4: File the Deed with the County Recorder
Once the deed is signed and notarized, it must be filed (or “recorded”) with the county clerk or recorder’s office where the property is located. This legally completes the transfer of ownership to the LLC.
Be sure to pay any required recording fees and verify the filing process in your specific county.
Step 5: Update the Property Insurance
After the transfer, notify your insurance provider and update the policy to reflect that the LLC is the new property owner.
This ensures that:
- Liability protection extends to the LLC
- The correct entity is named on your policy
- You avoid claim issues in case of damage or legal action
Step 6: Update Lease Agreements and Tenants
If the property is rental real estate, update your lease agreements and notify tenants of the new legal owner (the LLC).
Make sure future rent payments, legal notices, and correspondence are directed to the LLC’s name and business address.
🧾 Other Considerations
- Property Taxes: Some states may reassess property taxes upon transfer to an LLC.
- Transfer Taxes: Check if your state or county charges a real estate transfer tax.
- Title Insurance: Consider updating or purchasing new title insurance to reflect the LLC’s ownership.
- Estate Planning: You can place LLC membership interests in a trust to avoid probate.
Benefits of Transferring Real Estate to an LLC
- Personal asset protection against lawsuits or tenant claims
- Simplified ownership for multiple partners
- Tax benefits through pass-through income
- Professional image for landlords and real estate investors
- Better succession planning and inheritance structure
Common Mistakes to Avoid
- Not informing your lender about the transfer
- Using the wrong type of deed
- Failing to properly record the transfer
- Not updating insurance or lease agreements
- Mixing personal and LLC finances after transfer
Final Thoughts
Transferring real estate to an LLC is a smart move for liability protection and long-term business planning — but it must be done carefully to avoid legal or tax consequences. Always consult a real estate attorney or tax professional before proceeding.
At FormLLC, we help business owners and investors form LLCs, register for EINs, and guide you through real estate transfers and compliance — all across the United States.
