toy home with house keys next to it

LLC Assignment of Mortgage

Thinking about transferring ownership of your property to your LLC? Please read this first!

You’ve just closed on the perfect vacation investment property. It’s got the perfect location, right next to the beach or the ski slopes or in the heart of town. You got your loan approved right before mortgage interest rates went through the roof. Whew!

The plan is you’ll rent out the place short-term for some passive income and maybe stay there every now and again when you need a break from it all. The property manager is all lined up and the listing looks great on all of the online short-term rental services.

You’ve done your homework and already know that running a short-term rental property can introduce personal liability to you and your assets, for example if someone gets hurt in the place. So, you bought a great insurance policy and set up an LLC to be the “owner” of the property and to shield your personal assets from liability. The only thing left to do is transfer ownership by deed to the LLC, right?


Before you set up an LLC and transfer ownership of your property to it, don’t forget to check with your lender first. Some lenders will flat out deny your request. Other lenders will be just fine with the arrangement.

The transfer of an obligation (in this case, your obligation to pay the mortgage) is called an “assignment.” All mortgages will have an assignment clause and almost all (if not all) will require you to get written approval from the lender to assign ownership from you to an LLC.

If you don’t get this written approval, the lender might be able to say that you breached your mortgage agreement. It’s possible your lender could “accelerate” the loan, meaning, they can say the whole amount is due immediately! If your lender says no, you might also be out legal fees paid to set up your LLC and draft any corporate documents.

Has this happened to you or someone you know?

We’ve definitely seen this scenario and are here to help you navigate protecting your personal assets with LLCs and other options. Let us know how we can be of assistance.

Basecamp Legal offers a range of legal services for new and growing companies. We will help you make the important, early legal decisions so you hit the ground running. As you grow, we will help you with your day-to-day legal needs so you can focus on your business. We help companies throughout Colorado, California, Idaho, Washington, and Wyoming. You can book a free consult here.

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