I have clients (husband and wife) who have an LLC and want to purchase the wife's parents 2 properties through the LLC. Any advice? The wife still carries the same last name (maiden) as her parents and many times I see banks asking for their Articles/Members/Owners, etc. of the LLC.
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Also, just spoke with my title rep (branch manager) and they ARE still insuring LLC's. He has not heard otherwise. Hmmmm
Thank you everyone for your replies! Just puts this in perspective for me...........no matter how we try to help our clients, we must always protect our jobs! I will "re-think" my options here.
Your scenario could very well be considered as fraud unless the lender is fully made aware of the relationship between all parties. Failure to disclose would not be in anyone's best interest unless the properties are really worth going to jail for.
I don't believe the Title Companies are insuring properties purchased under LLC's anymore. At least that is what I've been told by my Title Rep. Many LLC's are being investigated for short sale fraud.
By now I shouldn't be, but I am continually surprised at the dumb things that come out of title co people. Virtually every time I hand them an approval, they add expenses not approved and the HUD-1 gets rejected. I just keep getting impressed by the misinformation and missteps. And as Wayne says, it is the chain of title/the property being insured - has nothing to do with who bought the property. Your title co friend spends too much time at the water cooler creating rumors.
Sabrina, that's hard to believe since title insurance has nothing to do with the buyers, only the chain of title up through the seller. I am aware there's a lot of fraud with LLC's and Land Trusts, mostly in the way of skirting transfer deed restrictions.
Be careful with BofA though. 1. ,The will want LLC docs, all of them, articles, POA, etc. I had one we were trying to work as a COOP. So we went in without an offer. Once we got our sale price we submitted offer. LA was related to buyer. Seller was not related to anyone. First page of the offer was the addendum stating relationship. Not only did they deny the offer they closed the file completely and would only let us start over by working a traditional short sale and of course a new buyer. Not only can seller not be related but the LA can not be related to buying side.
Just ask you your self "what is an arm lenght transaction" that will give you the answer. Appears like somebody trying to short change on a loan and not in good faith.
I have done a short sale where the mother bought the home from her son. We knew it was probably not going to work but we were upfront about the relationship between the buyer and the seller at all times. The son lived up north and the mother lived in Florida near the property. He stated that he had a business and a home up north and never planned to live in the home or the State of Florida. We kept waiting for the decline letter but it never came. I would say we were lucky, but if you try it - be very clear about the relationships and put it in writing . . . protect yourself and your client.
Ditto.
It's a non starter.
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