Fort Worth, TX asked in Real Estate Law for Texas

Q: Joint owners want to transfer title into a newly formed LLC but have loan on prop. Possible? Will it effect the loan?

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1 Lawyer Answer
Douglas J. Shumway
Douglas J. Shumway
  • Salt Lake City, UT
  • Licensed in Texas

A: Generally this sort of situation is governed by what is generally known as a "due on sale" clause. Most loan documents have a provision that restricts the transfer of property and when you transfer the property (assuming the lender discovers such transfer) then the lender may call the loan due. Technically you would certainly be in violation of the contract if it contained such provision and you transferred the property, but this sort of thing is done on a very regular basis by home flippers, etc. Lenders do not generally want to call a loan due so it is a relatively rare occasion when they declare a default and begin foreclosure after a due on sale provision is breached. The foregoing answer is provided by Douglas J Shumway, Esq.: (801) 478-8080. The answer provided is not intended to form an attorney client relationship and should not be construed as legal advice. Mr. Shumway is licensed only in Utah. For more information go to

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