{"id":13151,"date":"2023-04-15T08:33:42","date_gmt":"2023-04-15T15:33:42","guid":{"rendered":"https:\/\/www.keytlaw.com\/azllclaw\/?p=13151"},"modified":"2023-04-16T08:32:25","modified_gmt":"2023-04-16T15:32:25","slug":"due-on-sale","status":"publish","type":"post","link":"https:\/\/www.keytlaw.com\/azllclaw\/2023\/04\/due-on-sale\/","title":{"rendered":"Will My Lender Call My Loan If I Convey Land to My LLC?"},"content":{"rendered":"<div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 fusion-flex-container has-pattern-background has-mask-background nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start fusion-flex-content-wrap\" style=\"max-width:1196px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:1.92%;--awb-margin-bottom-large:20px;--awb-spacing-left-large:1.92%;--awb-width-medium:100%;--awb-order-medium:0;--awb-spacing-right-medium:1.92%;--awb-spacing-left-medium:1.92%;--awb-width-small:100%;--awb-order-small:0;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-text fusion-text-1\"><p style=\"text-align: justify;\"><strong>Question<\/strong>:\u00a0 I own a rental home that I want to put into an LLC for asset protection, but it is subject to a deed of trust that has a due on sale clause in it.\u00a0 If I form an LLC and convey the home to the LLC will the lender exercise the due on sale clause and demand I pay off the loan?<\/p>\n<p style=\"text-align: justify;\"><strong>Answer<\/strong>:\u00a0 A due on sale clause is text in the deed of trust that says that the lender can demand payment of the balance owed on the loan if the borrower transfers ownership of the land.\u00a0 This is a common clause in residential loan documents.<\/p>\n<p style=\"text-align: justify;\">I\u2019ve formed 4,000+ AZ LLCs into which people transferred land that was subject to a mortgage or deed of trust. I\u2019ve never had an LLC client\u2019s lender call the loan because of the transfer. If your lender were to call your loan Arizona law says that if you cure the default by transferring the land back to you the lender must stop the foreclosure.<\/p>\n<p style=\"text-align: justify;\">The purpose of a due on sale clause is to give the lender an option to call the loan when the borrower ceases to own or have any involvement with the land. When the borrower transfers the land to the borrower\u2019s LLC the borrower continues to be involved with the land and will make the future payments. That\u2019s why lenders don\u2019t call the loan when the borrower transfers the land to the borrower\u2019s LLC.<\/p>\n<p style=\"text-align: justify;\">Advice:\u00a0 Don&#8217;t contact the lender and ask for permission.\u00a0 The standard response is you cannot do it and you may get yourself on the lender&#8217;s radar.<\/p>\n<\/div><\/div><\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"footnotes":""},"categories":[4665,8,37,4664],"tags":[],"class_list":["post-13151","post","type-post","status-publish","format-standard","hentry","category-bank-problems","category-faqs","category-operating-llcs","category-questions-people-ask"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.7 (Yoast SEO v27.9) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Will My Lender Call My Loan If I Convey Land to My LLC? 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