The Quick Read: To change title on a hard money loan without a due-on-sale problem, get the lender’s written consent before you record any deed, or retire the loan and take title in your entity at the next closing. A deed changes who owns the property, but it does not change who owes the debt or release the lien. This is general information about investment real estate, not a vehicle title loan.
- Recording a deed into your own LLC can trigger the due-on-sale clause, even when you own 100% of the LLC.
- The federal exemptions are built around owner-occupied homes, so they generally do not reach a rental, flip, or rehab loan.
- Written consent or a loan modification, obtained before recording, is the direct route.
- Paying off the loan and vesting title in the entity at the permanent-loan closing is the cleanest route.
- Silence from the lender is not consent, and staying quiet is not a plan.
What Does the Due-on-Sale Clause Do on a Hard Money Loan?
It lets the lender demand the full balance if you sell or transfer the property, or an interest in it, without written consent. Federal law defines the clause in 12 U.S.C. § 1701j-3. It also says a lender may enforce the clause notwithstanding state law to the contrary.
What this loan actually costs to carry.
Hard money is sized against the project and priced by time. Enter the deal and see how much the program will lend, the cash required at closing, the carry while you hold it, and what is left at the exit.
Leverage tiers on the current program: 85% with fewer than 2, 90% with 2 or more, 93% with 5 or more completed projects — every tier capped at 75% of after-repair value. Loan amounts up to $5,000,000, larger by exception; terms of 6 to 18 months, interest-only, no prepayment penalty. The rehab portion funds in draws against completed work, not at closing.
Program parameters shown update from Lendmire’s centralized guideline source. Rate, points, and months are editable assumptions, not quoted terms.
Cost cap sets the loan · positive spread
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. Rate, points, and months are editable assumptions. Hard money is business-purpose financing for real estate investors, not a consumer mortgage. Leverage on the current program tops out at 93% of project cost for investors with a documented track record, capped at 75% of after-repair value, with rehab funding up to 100% of the documented budget released in draws; actual terms vary by lender, borrower experience, property, and exit. Lendmire is a mortgage broker, not a lender.
The word that matters is “option.” The clause does not make a transfer an automatic breach. It gives the lender the choice to accelerate the loan, meaning to call the whole balance due. On a hard money loan, the note and deed of trust or mortgage decide how that choice works. Some private lenders write broad transfer restrictions. Others write narrower ones.
Hard money is also a different animal from a long-term mortgage. Terms on our program run 6 to 18 months, interest-only, and the exit is already time-pressured. If a transfer leads to acceleration, you owe the entire balance on a loan that was going to come due soon anyway. Terms and leverage vary by lender, property, and experience.
How the Lender Finds Out
Lenders rarely need to hunt. A recorded deed changes the vesting in the county records. Title searches, tax bills, and insurance paperwork also carry the owner’s name. Insurance is a common tripwire: one investor describes changing the insurance documents to the LLC’s name as what started the problem with the banks. Keep that in mind before you decide that no one will notice.
Which Transfers Are Protected, and Which Are Not?
The statute protects a short list of transfers, and an LLC is not on it. Subsection (d) applies only to loans on residential property with fewer than five dwelling units. The OCC’s implementing regulation, 12 CFR 191.5, spells out the protected events.
| Commonly protected | Not protected |
|---|---|
| Subordinate lien | Deed into your own LLC |
| Transfer to a relative on death | Deed into a multi-member entity |
| Divorce-related transfer | Rental property moved to a trust |
| Joint-tenant survivorship transfer | Commercial property |
| Trust where borrower is beneficiary and occupant | Business-purpose loan on a flip or rehab |
The reason is the occupancy test. The regulation’s specific limits apply to a loan on the security of a home occupied or to be occupied by the borrower. The trust exception, for example, requires the borrower to be the beneficiary and occupant. A hard money loan on a rental, flip, or rehab is a non-owner-occupied business-purpose loan, so these protections generally do not reach it.
Practitioners in the estate-planning bar say the same thing about entities. A practitioner article on the Garn-St Germain Act adds that a rental transferred to a trust is not protected, unlike a primary residence.
What Are Your Real Options?
You have four routes, and the right one depends on how much time the loan has left. Most investors do best with consent or a clean payoff, not a mid-loan deed.
| Route | What it requires | Risk | Best for |
|---|---|---|---|
| Lender consent | Written approval before recording | Low if documented | Loans with real time left |
| Modification or assumption | Lender signs new terms | Low, but costs add up | Adding a partner or entity |
| Refinance into the entity | New loan closing in the LLC | Depends on the new file | Stabilized properties |
| Close in the entity from day one | Lender underwrites the LLC | Lowest | New purchases |
A fifth path, wait until payoff and then re-vest, is the same as the refinance route. The lien is released at payoff, so no due-on-sale option is left to trigger.
How Do You Request Lender Consent?
Ask in writing, before anything is recorded, and get the answer in writing too. The statute turns on prior written consent. That phrase is the whole game. A verbal “should be fine” does not count, and neither does a lender that keeps cashing payments.
Work through these steps in order:
1. Pull the loan documents. You need the promissory note, the deed of trust or mortgage, and any loan agreement or rider. Find the transfer, vesting, insurance-change, and “interest in the property” provisions.
2. Ask about the approval process first. A law-firm blog on LLC transfers suggests explaining that there is no change in beneficial ownership, and asking the lender how it handles approvals.
3. Send a short written request. Name the property, the loan, the receiving entity, and who owns it. State that you remain personally liable.
4. Expect conditions. Lenders often ask for entity documents and a personal guaranty from the individual. Some will want a modification fee.
5. Get the consent in a signed document. It should name the transfer, confirm the loan stays in place, and say the lender will not exercise the clause for this transfer.
6. Only then record the deed.
Entity Documents to Have Ready
Have these ready before you send the request: formation documents, an operating agreement showing ownership, authority to sign, a certificate of good standing, and a member resolution accepting the property. A law-firm guide on transferring title to an LLC recommends that resolution. It also says to update lease and title insurance documents as needed.
Does the LLC Protect You From the Lender?
No. Liability protection and loan risk are two separate things. An LLC may help with liability claims, but it does not remove the lender’s acceleration right. Lenders typically keep your personal guaranty in place. So the guarantee follows you even when title moves.
Co-owners add another wrinkle. If partners are on title but not on the loan, sort out who is moving where before anyone signs a deed.
Where the General Rule Breaks
Several edge cases change the answer. None of them is a safe harbor for a rental.
Trusts. The trust exemption is tied to the borrower remaining beneficiary and occupant. Some estate-planning commentary notes that an unpublished case found the occupancy requirement beyond the regulation’s authority, yet still found no protection for LLC transfers. Do not build a plan on that gap.
Land-trust workarounds. Some investors name themselves initial beneficiary of a land trust, then assign the beneficial interest to the LLC. This is contested, and it is risky. A lender can still treat the assignment as a transfer of an interest in the property. Call it a risk, not a fix.
Assumption language. Without express words, an LLC takes title subject to the debt, so it is not bound to the lender. Even an express assumption in the deed creates an obligation to the grantor, not to the lender. Only a signed agreement with the lender binds the LLC.
Same-entity loans. If the hard money loan was already made to the LLC, no title change is needed at refinance. That is the reason many investors close in the entity at origination, with the lender underwriting the entity.
Agency contrast. Servicing rules on some agency-owned loans allow certain LLC transfers under conditions. Those rules govern agency loans, not hard money notes. Do not assume they carry over.
What Happens If You Transfer Without Consent?
The lender may accelerate, and you may owe the whole balance on a short-term loan. Acceleration can lead to default and foreclosure if you cannot pay. Some investors report never hearing from their servicer. Others report notes that were called. A lender facing a short maturity may behave differently from the servicer of a long-term mortgage. Treat enforcement as a real possibility.
Some online advice says to stay quiet or to deed the property back if the lender notices. That is not a sound plan, and we do not endorse concealment. Insurance and title records surface the change, and a breach discovered late is worse than a request made early.
How a Pay-Off-and-Re-Vest Exit Works
Most hard money loans end in a refinance, not a mid-term deed. Many investors refinance out of hard money into long-term DSCR investor loans once the property is stabilized, and Lendmire brokers that path. Choosing the vesting at that closing avoids a mid-loan transfer entirely.
Here is how the sequence looks. Say you bought a rental with a hard money loan in your own name and now want an LLC to own it. Instead of recording a deed mid-loan, you apply for a DSCR refinance that closes in the LLC, subject to lender program eligibility. The new lender pulls a fresh title search and entity documents, and the old lien is released at payoff. There is no outstanding due-on-sale option left to trigger.
Across our wholesale network, most DSCR programs want about 6 months of seasoning before a cash-out refinance, and cash-out tops out around 75% LTV on a standard rental. Moving a property into or out of an LLC can prompt title review, and some lenders treat it as a reason to restart seasoning. Ask the lender before changing the vesting. For a fuller walkthrough of how the long-term loan works, see Lendmire’s complete DSCR loans guide. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The DSCR number compares rent to the full housing payment only. Clearing 1.00 is not the same as positive cash flow, because repairs, vacancy, management, and capex sit outside the calculation. A vesting mismatch between the note, title, and insurance is where refinance files tend to stall.
Which Deed Should You Use?
The deed type matters less than the lender’s consent, but it still matters for title insurance. One investor advises using a warranty deed rather than a quitclaim to avoid later title insurance issues. That is practitioner opinion. Confirm the choice with a title attorney before you record.
Insurance, Title Policy, and Recording Costs
Keep the title company and insurer in the loop before you record. The title insurer may need to approve the transfer so the policy stays valid. Transfers to an LLC may bring transfer taxes depending on state law, plus county recording fees. The named insured should match the vesting and the lender’s requirements, and the insurer should know about the entity and the rental use. Tax treatment varies; consult a qualified professional.
Key Terms Defined
- Due-on-sale clause: A loan provision that lets the lender demand full repayment if the property or an interest in it is transferred without written consent.
- Acceleration: The lender’s act of declaring the whole loan balance due immediately.
- Vesting: How title to the property is held, meaning the name or entity shown on the deed.
- Personal guaranty: A promise by an individual to repay the loan if the borrowing entity does not.
- Quitclaim deed: A deed that moves whatever interest the grantor holds, without promises about the quality of title.
- Seasoning: The waiting period a lender wants between a purchase or title change and a refinance.
What This Means for Your Decision
The decision comes down to time left on the loan and how soon the entity must own the property. If the loan has runway, ask for written consent. If the maturity is near, plan the refinance and vest title in the entity at that closing. If you are buying now, ask whether the lender will underwrite the LLC from day one. Program terms, leverage, and eligibility vary by lender, property, and experience, and nothing here is a commitment to lend.
This article is general information, not legal or tax advice. Consult a qualified real-estate attorney or CPA about your own loan documents and situation before you record anything.
Frequently Asked Questions
Does a quitclaim deed to my LLC change my hard money loan?
No. The deed changes who owns the property, but the debt and the lien stay in place. It can also trigger the due-on-sale option, so get written consent first.
What if the lender stays silent after I ask?
Silence is not consent. The statute turns on prior written consent, so wait for a signed approval or a modification before you record. Accepted payments do not replace that document.
Do I stay on the personal guaranty after title moves?
Typically yes. Lenders usually keep your guaranty in place, and they often require one when they allow an entity to hold title. Expect to sign again if the loan is modified.
Do the statutory exceptions cover an LLC?
No. The listed exceptions cover items such as relatives on death, divorce transfers, and certain trusts, and they are framed around owner-occupied homes. A deed to an LLC is not on the list.
Can I just refinance instead?
Yes, and it is often the cleanest route. The lien is released at payoff, and a DSCR loan can close in an LLC, subject to lender program eligibility. Expect the new lender to review title, entity documents, and insurance.
About Lendmire
Lendmire is a DSCR-focused mortgage brokerage, NMLS# 2371349, placing investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed by the lender around a property’s rental income rather than personal income documentation, which fits LLC-held rentals, self-employed investors, and portfolios scaling past conventional financed-property limits. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. U.S. Code, 12 U.S.C. § 1701j-3 (GPO)
3. 12 CFR 191.5
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Is a DSCR Loan Better Than a Bank Commercial Loan on a Fourplex? · Should 10+ Doors in LLCs Move to a Blanket DSCR Loan? · How Long Each Step of a DSCR Refinance Takes to Pay Off Hard Money
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.