So, you got a piece of property and you’re thinking about transferring it to a LLC.  Here are a few things you may want to consider before you make the move.  This list is by no-means inclusive of all the issues that may arise when considering a transfer.  It is very important to consult with a qualified real estate attorney if you are considering a transfer of property.

1. • Documentary Stamp Tax: Florida imposes a documentary stamp tax on certain documents that are executed, delivered, or recorded. A transfer of real property may trigger this tax, and the amount due can be substantial depending on the circumstances of the transfer.
   • Property Tax Reassessment: A transfer of real property to a wholly owned LLC is generally considered a change of ownership for property tax purposes. This may result in a reassessment of the property’s taxable value, potentially increasing future property taxes.
   • Loan Acceleration Clauses: Many mortgages contain a due-on-sale or acceleration clause that permits the lender to declare the loan immediately due upon a transfer of ownership. A transfer of the property to an LLC may trigger this provision, which could require refinancing the loan, possibly at a higher interest rate.
   • Insurance Coverage: Property insurance policies should be reviewed and updated to reflect the LLC’s ownership. Depending on the policy and insurer, the LLC may need to be added as the named insured or as an additional insured to ensure continuous coverage.
   • Title Insurance Considerations: The type of deed used for the transfer may affect the continued availability of title insurance coverage.
     • A quitclaim deed transfers only whatever interest the grantor possesses and provides no warranties regarding title. Because the grantor makes no representations or warranties, the original owner’s title insurance policy may not continue to protect the LLC after the transfer. In that event, the LLC may need to obtain its own owner’s title insurance policy, even if it is wholly owned by the original owner.
     • A warranty deed, by contrast, includes the grantor’s representations and warranties regarding title. Because the grantor remains liable for title defects covered by those warranties, the grantor’s title insurance may continue to provide protection in certain circumstances.

Before transferring property to an LLC, consider these potential issues, consult with your title insurance company or a qualified real estate attorney to determine whether your existing title insurance coverage will remain effective and whether a new policy is advisable.