Read Time: 5 Minutes
TL;DR
This webinar focused on the process of transferring rental properties into LLCs or trusts, why investors choose to make those ownership changes, and what practical considerations should be addressed before doing so. Sherry provided an overview of the title and transfer process, while Mark discussed how ownership changes fit into an investor’s broader strategy. Throughout the discussion, both speakers stressed the importance of planning ahead and coordinating ownership changes with lenders, insurance providers, and property managers.
Why Investors Transfer Property Ownership
Ownership transfers are often used to improve asset protection, simplify estate planning, or restructure how investment properties are held. While LLCs and trusts are the most common transfer destinations, ownership changes can also involve adding or removing individuals from title or transferring property between entities.
Common reasons investors make ownership changes include:
- Asset protection
- Estate planning and probate avoidance
- Adding or removing owners
- Restructuring investment portfolios
- Moving properties into LLCs or trusts
While title companies can facilitate the transfer, investors should consult attorneys and accountants when determining the best structure for their specific goals.
The Transfer Process Is Simpler Than Many People Expect
The first step is making sure the LLC or trust has already been established. Once that entity exists, an attorney prepares a deed transferring ownership from the current owner to the new entity.
The process generally includes:
- Establishing the LLC or trust
- Preparing the deed
- Executing the transfer documents
- Recording the deed
- Updating supporting records and documentation
Once the deed is recorded, the transfer becomes official.
Trusts vs. LLCs
While the transfer process is very similar for both trusts and LLCs, they are generally used for different purposes.
Trusts
Trusts are most commonly used for:
- Estate planning
- Probate avoidance
- Managing how assets are passed to heirs
- Creating continuity if an owner becomes unable to manage their affairs
When establishing a trust, it is very important that you name:
- A trustee, who manages the trust
- A successor trustee, who can step in if the primary trustee becomes unable to act due to illness, incapacity, or other circumstances
LLCs
LLCs are most commonly used for:
- Liability protection
- Holding investment properties
- Separating personal and business assets
- Creating a business structure for real estate ownership
Many investors choose LLCs because of the asset protection benefits they can provide, though she encouraged owners to seek legal and tax advice when determining the right structure for their situation.
While both entities can hold title to real estate, the decision often comes down to whether an owner’s primary goal is asset protection, estate planning, or a combination of both.
Recording The Deed Matters More Than Updating Tax Records
A common misconception is that ownership changes immediately appear on public tax records.
Tax records often lag behind actual ownership changes. Some jurisdictions update quickly, while others may not update until the next tax cycle. For Example, a transfer recorded in January might not show on tax records until several months later.
For that reason, the recorded deed—not the tax website—is the true confirmation that ownership has changed.
A standard ownership transfer through their office costs approximately $350, which includes:
- Attorney deed preparation
- Recording fees
- Administrative costs
Timing depends largely on the jurisdiction.
- E-recording counties may process transfers almost immediately.
- Paper-recording counties can take several days or longer.
- Paper-recorded deeds often must be mailed back after processing.
It is encouraged that owners to follow up if they do not receive a copy of the recorded deed
One of the most discussed topics was how transferring a property into an LLC can affect an existing mortgage. Many mortgages contain a due-on-sale or due-on-transfer clause, though lenders rarely perform title searches solely to monitor ownership changes.
Sherry shared a real-world example where a lender discovered a property had been transferred into an LLC shortly after closing and required it to be transferred back into the owner’s personal name.
Key points:
- Loan terms vary by lender.
- Due-on-transfer clauses may apply.
- Lenders generally don’t monitor ownership changes proactively.
- Reviewing mortgage documents before a transfer is a smart first step.
Mortgage considerations are one of several factors investors should evaluate before deciding to change ownership structures.
Insurance Should Be Updated Immediately.
Insurance is one of the most overlooked aspects of an ownership transfer.
Once ownership changes, the insurance policy should reflect the new owner—whether that is an LLC or a trust. If a significant loss occurs and the ownership information on the policy does not match the property’s actual ownership, it could create complications during the claims process.
RPM supports owners who decide to make ownership changes.
We can:
- Coordinate with the title company
- Update ownership records
- Adjust owner statements and tax reporting
- Ensure tenants experience little to no disruption
From the resident’s perspective, the transition should be seamless and largely invisible.
Planning Ahead Is Better Than Reacting Later
One of the strongest messages throughout the webinar was the importance of being proactive.
Ownership changes are most effective when they are part of a long-term strategy rather than a reaction to a problem. Common times investors evaluate ownership structures include:
- Before purchasing a property
- Before refinancing
- During business restructuring
- When adding or removing owners
Waiting until after a legal, financial, or liability issue arises may limit the benefits an ownership change can provide.
Final Thoughts
This webinar focused less on promoting LLCs or trusts and more on clarifying what actually happens when ownership is transferred. Deeds, trusts, and LLC structures all come with practical implications that go beyond paperwork. A key takeaway is that changes in ownership can affect mortgages, insurance, taxes, and day-to-day property operations. Working with the right professionals early can help investors avoid common and costly mistakes.
We Talked To A Real Estate Attorney
While we cannot provide legal advice, the team at RPM connected with a real estate attorney to discuss some of the most common questions property owners and investors have. In our next blog, we’ll share their general insights and expert perspective on these topics. Read more here.
This content is provided for general informational and educational purposes only and does not constitute financial, legal, tax, or investment advice. Readers should consult with licensed professionals regarding their specific circumstances.
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