As a Realtor, people ask me all sorts of real estate related questions. The latest question I received was whether an LLC could buy property in San Francisco. And, well, the answer is a mixed bag.
Sometimes, I have the best answers. Other times, I turn to people on my “super star team!” (Some members of that team include escrow officer, Michelle Patterson of Old Republic Title, stagers Lisa Violetto and Gary Tarmine, and mortgage broker Marc Geshekter.)
This time, Marc Geshekter comes to the rescue with an explanation about LLC’s and property ownership in SF:
Most lenders today are not interested in lending only to an LLC as the only recourse a lender would be to hold only the LLC liable for the debt or take control of the property. Lender enforced foreclosure is a losing proposition for a lender and is something that lenders try avoid as much as possible. Lenders today are fully aware of the fact that one of the purposes of an LLC is to help shield its members from possible liability arising from the business dealings of the LLC. Because of this lenders today typically require additional security be included in the form of the personal assets of those members of the LLC in order to approve and close the mortgage loan.
A few lenders do still exist today who allow the title to the property to be placed in the name of the LLC. These lenders do still require the individual(s) to qualify for the loan based on standard lending guidelines which includes holding the individual liable for the note in the event of a default. The short answer is, no, typically a lender will not lend only to an LLC without some form of additional security other than the LLC. Please contact me directly with additional questions about lending to an LLC.
Senior Mortgage Consultant
RPM Mortgage, Inc.
415.722.3196 – cell/text
866.743.2252 – eFax