A bit of a legal question here, just wanted to see if anyone has had experience with this.

Background: Out house site on a few acres (7). One acre with a shop is being leased by a neighbor for his business, primarily just parking trailers. We both own general liability for that part of the property and I am named as a covered individual on his policy. However, I still don't like the idea of exposing our home ownership to liability if something goes wrong on the property.

It seems the way to mitigate this is to transfer the property to an LLC so the LLC can then sign the lease agreement. Is this difficult to do? Would the current mortgage company allow it or is that unlikely? My little bit of googling makes it seem like the main risk is the mortgage company requires re-financing under the LLC (which couldn't support a loan)/or calls the loan because the property has been transferred.

Any experience in this space?

Depends on the lender and if they find out. However, I would think you'd want to replat it first to get the business on its own property. In which case the mortgage company would definitely have an issue with.

I've done it twice and didn't hear a thing back from the lenders.

Martin Q. Blank said:

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Depends on the lender and if they find out. However, I would think you'd want to replat it first to get the business on its own property. In which case the mortgage company would definitely have an issue with.

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The replat might also increase your property taxes.

The leased property actually already has its own tax ID for other reasons so no effect there. I also read a bit about homestead protection so not entirely sure how that factors in since it is part of the homestead. Probably just need to speak with a lawyer.

Call Josh J Benn, real estate attorney.

https://www.mytexaslawyer.net/

He helped me with a similar situation as yours.

I looked into this some when considering purchasing a VRBO rental property a few years back. Transferring a property from your name to another party COULD be treated as a sale by the mortgage holder, meaning the balance would become due. Many or most mortgage holders won't do that though, as long as the transfer reduces the chances you will someday default on the loan. It just depends on the lender.