Closing in the Name Of

By
Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343

Closing in the Name Of

 

There will be no profanity in this post, just in case you get the cultural reference in the title.  I won't even repeatedly scream at you.  Instead we're going to cover a topic that sidesteps injustice, drama or even frequent occurrence, but it deals with a scenario that comes up occasionally and when it does, there is quite a bit we should know before taking action.  So let's talk about closing a residential real estate transaction in the name of an LLC or other business entity, like a partnership or a corporation.  Can you do that?  What's different and where does one start the process?

 

[Too lazy to read the rest?  Watch the video instead!]

 

Guarantee, Guarantor, Guarantas

The first two words above, anyway, are the key concept here.  It is indeed possible for a one- to four-unit residential property to be closed or vested in the name of a business entity, but when this happens, essentially what's transpiring on the lending side is that one or more of the business owners are using their personal income, asset and credit profile to guarantee the loan on behalf of the entity.  So, in essence, the "borrower" becomes a "guarantor." Again, critical to grasp the concept that the business itself is not the borrower(s).  If that were the case, we'd be talking about a commercial loan and not a residential mortgage, as here.

 

Wage Against the Machine

Consistent with a traditional mortgage for a traditional borrower with a traditional credit profile, our business entity borrower will have to provide an additional layer of documentation pertaining to the business itself.  When vesting or closing in the name of an LLC, partnership or corporation, the owners of the business, if not the same as the borrowers/guarantors for our loan, will need to provide articles of incorporation, partnership agreements and other forms and questionnaires to support that the owners are all aware that a mortgage is being taken on the subject property.  Perhaps most importantly, when seeking to obtain a loan in the name of a business entity, expectations need to be set up front to assure that the "borrowers" as well as the other majority owners in the business understand what will be involved. 

 

So yes, we can close in an LLC.  We can close in a partnership or corporation too.  But we have to view things differently from Day 1 in order to get it right and our clients must understand what will be expected of them and their co-owners.  With the new tax laws and with an increasing number of real estate investors holding their properties in an entity for both legal and tax purposes, closing in an LLC or other entity is becoming more common.  If you have questions about how to efficiently get a mortgage in the name of such an entity, let me know how I can assist.

 

Some of those that work forces, 

 

 

Robert J. Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate's Human Resources Department.

 

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood ChicagoIL 60613 - (866) 934-7283

close

Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Nick Vandekar, 610-203-4543 01/24/2019 09:27 AM
  2. Barbara Todaro 01/24/2019 10:07 AM
Topic:
ActiveRain Community
Location:
California San Francisco County
Groups:
Realtors®
The Lounge at Active Rain
San Francisco Real Estate
Addicted to Active Rain
Bananatude
Tags:
investor
property
home loan
closing
partnership
corporation
real estate
llc
mortgage
vesting
entity

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Ambassador
2,869,658
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I have a corporate loan and yes there were extra hoops, but it also helps protect my personal assets more. 

Jan 24, 2019 09:08 AM #3
Rainmaker
785,118
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Excellent post, something all should know, and be aware of so they can provide options to their clients, especially investors.

Jan 24, 2019 09:20 AM #4
Rainmaker
5,039,626
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Hi Rob Spinosa good job with your post.... and you're only a few points away from a "free ride"....

Jan 24, 2019 10:03 AM #5
Rainmaker
3,983,365
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Interesting.  Way above mu pay grade but still great info

Jan 24, 2019 10:15 AM #6
Rainmaker
3,637,635
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good afternoon Rob. This is thorough and easy to follow. Well done and nice video too.

Jan 24, 2019 10:20 AM #7
Rainmaker
3,363,198
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi Rob -- this post is very informative and your presentation makes it even more effective - well-designed.  

Jan 24, 2019 10:22 AM #8
Rainmaker
1,247,722
Ryan Huggins - Thousand Oaks, CA
https://HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

Loved the reference to the Rage Against the Machine song!  Great information too, thanks for sharing.

Jan 24, 2019 10:35 AM #9
Rainmaker
1,549,525
Sandy Padula and Norm Padula, JD, GRI
HomeSmart Realty West & Geneva Financial, Llc. - Carlsbad, CA
Presence, Persistence & Perseverance

Rob Spinosa Looks like I am late to the celebration party. Congratulations on your 'Freedom'!

Jan 24, 2019 01:51 PM #10
Ambassador
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Anna Banana Kruchten - Phoenix Homes Sales
Phoenix Property Shoppe - Phoenix, AZ
603-380-4886

Rob excellent post. We have closed loans for LLC's particularily for investors. It is a bit tricky but once one knows the ropes it become easier - as long as they due diligence up front and not wait till further along - that's when I've seen issues pop up as they didn't know about this or that....not fun.

 

And - Congrats for reaching over 500K!

Jan 24, 2019 02:18 PM #11
Rainmaker
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Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

Great post - very informative and you are a natural in front of the camera.  And on the guitar. 

Jan 24, 2019 05:31 PM #12
Rainmaker
1,027,000
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

Congratulations! You've been featured in Bananatude!

Jan 24, 2019 05:34 PM #13
Rainmaker
2,772,745
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

You would definitely know more about the process than I would, but I would say I agree this is on the right track. :)

Jan 24, 2019 08:32 PM #14
Anonymous
Kimberly Weaver

I will have this song in my head all day now! Great reference. Great article.

Jan 25, 2019 04:22 AM #16
Rainmaker
2,464,739
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

You get closure with Rob Spinosa ...that's all I know

Jan 25, 2019 06:36 AM #17
Rainmaker
800,342
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.

I like the idea of including the video explanation along with the written blog post.  Gives the reader two ways to dissect the information.  

Jan 25, 2019 10:12 AM #18
Rainer
526,797
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Thanks for sharing! There is a lot of confusion and misinformation on this topic!

we can close in an LLC.  We can close in a partnership or corporation too.  But we have to view things differently from Day 1 in order to get it right and our clients must understand what will be expected of them and their co-owners. 

Jan 26, 2019 04:08 AM #19
Rainmaker
3,832,301
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Rob Spinosa ,

Wow..I'm blown away with the sharing of the information contained in your post. So much confusion and mis-information out there..your video makes it easy to understand. Congratulations on the well deserved featured post.

Jan 26, 2019 07:56 AM #20
Ambassador
3,356,876
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Great information shared both in the post & video - fantastic job on the video too, Rob! 

And, congratulations on hitting the 500 point mark! Happy Monday!

Jan 28, 2019 05:28 AM #21
Ambassador
4,014,536
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi Rob

Thanks for the education on something we should all be aware of. Haven't had this experience yet but you never know. Terrific video by the way!

Jeff

Jan 29, 2019 06:06 PM #22
Rainmaker
690,621
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Most purchases by LLCs in our area are done in cash. The involved parties, including agents, title and escrow companies, still need to have documentation to prove who is authorized to transact on behalf of the LLC. It would be the same with a partnership or any legal entity other than a natural person.

Feb 10, 2019 09:16 AM #23
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Rob Spinosa

Vice President of Mortgage Lending, Marin County
Can I Get a Jumbo Loan with 10% Down?
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