Can I Get a Mortgage in My Personal Name and Then Transfer the Property to an LLC in Florida?

This is a common question from vacation rental buyers who want the liability protection of an LLC but need conventional financing — which is typically not available to LLCs for residential properties.

The short answer: yes, you can transfer the property to an LLC after closing, but it may trigger the due-on-sale clause in your mortgage.

This post is for general informational purposes only and does not constitute legal advice.

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Why Buyers Want to Transfer to an LLC

Many vacation rental buyers want to hold their property in an LLC for liability protection — if a guest is injured on the property, the LLC structure can limit the owner's personal liability. However, conventional residential mortgages are typically only available to individual borrowers, not LLCs.

The workaround: obtain the mortgage in your personal name, close on the property individually, and then transfer the property to an LLC after closing.

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The Due-on-Sale Clause

Most mortgages contain a due-on-sale clause — a provision that allows the lender to demand full repayment of the loan if the property is transferred to another party without the lender's consent. Transferring the property to an LLC is technically a transfer that could trigger this clause.

The Garn-St. Germain Act provides some protection: it prohibits lenders from enforcing the due-on-sale clause for certain transfers, including transfers to a living trust where the borrower is and remains a beneficiary. However, it does not explicitly protect transfers to LLCs.

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How Lenders Actually Handle It

In practice, many lenders do not actively enforce the due-on-sale clause for transfers to single-member LLCs where:

• The borrower is the sole member of the LLC
• The borrower continues to make the mortgage payments
• The transfer does not affect the lender's security interest

However, this is not guaranteed. The lender has the legal right to call the loan if the due-on-sale clause is triggered.

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Options for Buyers Who Want LLC Protection

Option 1: Transfer after closing and accept the risk. Many buyers make the transfer and the lender never enforces the clause. This is a calculated risk.

Option 2: Notify the lender and request consent. Some lenders will consent to the transfer in writing. This eliminates the risk but requires lender cooperation.

Option 3: Use a land trust. A land trust is a revocable trust that holds title to the property. The Garn-St. Germain Act protects transfers to living trusts. The LLC can be the beneficiary of the land trust, providing some liability protection without triggering the due-on-sale clause.

Option 4: Use DSCR financing. DSCR loans are available to LLCs and do not have the due-on-sale issue. The tradeoff is a higher interest rate.

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FAQ

Will my lender find out if I transfer the property to an LLC?

Possibly. The transfer is recorded in the county property records, which are public. Some lenders monitor their loan portfolios for transfers.

What happens if the lender calls the loan?

If the lender calls the loan, you must pay off the full balance immediately or refinance. This can be financially disruptive.

Should I consult an attorney before transferring to an LLC?

Yes. The due-on-sale implications and the best structure for your situation depend on your specific mortgage, lender, and goals. Consult a Florida real estate attorney before making the transfer.

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Questions about purchasing or holding an Emerald Coast vacation rental through an LLC? I can connect you with attorneys and lenders who specialize in these structures.

— Kinsey Haddock P.A., Broker Associate | Coldwell Banker Realty — Panhandle | License #BK3253849