Quitclaim Deed to LLC

by Carol Deeb ; Updated July 27, 2017

Owning real estate investments can be a benefit to you and your partners. However, your liability can increase if tenants or others are harmed on your property and blame you. If the injured party files a lawsuit against you, your personal assets could be at risk. Forming a limited liability company (LLC) can protect you if the LLC is the legal owner of your property. Using a quitclaim deed will achieve the transfer in ownership between you and your company.

Quitclaim Definition

Quitclaim deeds are used to transfer property from one or more persons or entities to others. It gives your ownership in a property to someone else. It does not guarantee that you have a claim in it; but if you do, you are releasing it to the new party. It also does not give a warranty that the property is clear of any liens or other encumbrances, nor does it change the name on your mortgage or release you from the responsibility to continue to make payments.

LLC Definition

An LLC is a business entity filed with your secretary of state that protects its owners, called members, from personal liability for company debts or claims. Members can be individuals or entities, and there is no limit to the number allowed. Profit and losses pass through the company to the owners, who report them on their tax returns. In order to take advantage of the limited liability protection of an LLC, your personal and business transactions should be kept separate. When real estate is held by your LLC, then claims resulting from your liability of ownership cannot attach to your personal assets, only those owned by that particular LLC.

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Process

Simply forming an LLC does not protect you from liability as a result of your ownership in investment real estate. The property title must contain the name of your company. Therefore, you and any other owner, need to complete a quitclaim deed yourselves or through an attorney to transfer the property to your LLC. Jurisdictions may use different forms, but, in general, your quitclaim deed will contain the names of all owners as the grantors and the name of your LLC as the grantee, including a legal description of the property. The owners releasing their interest to the LLC will sign the deed and have it notarized and filed with the city or county recorder's office.

Considerations

Transferring the name on a title with a quitclaim deed is a permanent transaction unless you can prove that fraud or duress were involved. Normally, it cannot be taken back or undone without another quitclaim deed being completed and filed. Ask your accountant about any tax implications to the transfer and to the formation of the LLC itself. Since your liability is limited to what is owned by the LLC, consider forming one for each property that you own. This is important when you hold title on commercial properties, such as apartments and office buildings, and there is a high volume of people on the premises. In addition to the benefits of your LLC, buy an umbrella liability policy as an added layer of protection against claims of negligence or other fault.

References

About the Author

Carol Deeb has been an editor and writer since 1988. Her work has appeared in magazines, newspapers and online publications, as well as a book on education. Deeb is a real-estate investor and business owner with professional experience in human resources. She holds a Bachelor of Arts in English from San Diego State University.

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transunion credit card companieslaw of diminishing marginal producthow to calculate holding period returnhow long does a turbo tax refund takegross income on 1040can i file late taxes with turbotaxapply for itin without tax returnpod on checking accountwages tips and other compensation definition60 day late payment credit scoresalvation army stockton cawhat is bah payrent reporting to credit bureauswisconsin gamblingare nose jobs covered by insurancehow to calculate annual returnstrustor trustee beneficiary deed of trustjournal entry for selling sharesunrestricted net assetsdenver housing lotteryseries ee bond valueuninsured motorsw9 taxesslrp armyatm walmart money cardmy compass ga gov loginhow do you spell stalequit claim deed indianaw4pflexible budgets and performance analysispaying rent upfronttenants in severaltynationsbank corporation3 seller concessionflorida resident college tuition freeveterans of foreign wars benefitshow to find total utility from marginal utilityare preschool expenses tax deductibleharvard university scholarships for minority studentspersonal cash flow statement definitionrequirements for nrotc scholarshipmortgage grantorrenter walk through checklistwhat is cash value of powerballhow to calculate default riskpcm scholarship exami paid off my car loan where is my titledentists nearbyfha form 92544accrual examplesgold card application houston txtennessee quit claim deed formusing prepaid visa on amazonhow much can you inherit before taxhow much tax do you pay on lotto winningsfixed asset capitalization gaap24.9 apr credit cardaffordable christian collegeswhat is included in agitenant holdoverdifference between escrow and principaljersey city medical center charity carecash accounting and accrual accounting differencekp allied healthhow to activate a vanilla visa gift card onlinecalculate interest rate with present and future valueaarp delta dental insurancecolor guard college scholarshipsexperian phone number humanauto loan rates for 650 credit scorehow long does repossession stay on your creditclosing costs on a va loanfederal tax on lottery winningscopy of medicaid cardcheck value of us savings bondssecret security clearance bad creditcheck status of california state tax refund