Quoted $1,900 to move two rentals into an LLC. What part is real work?

Question

Two small houses, both owned in my own name, both with conventional loans on them. Attorney quoted $1,900 for the whole package: form the LLC, operating agreement, two deeds, plus what she called coordination. Someone on another forum told me you can do the LLC yourself for the state filing fee and that a deed is a one page form, which would make $1,900 sound absurd. I don't think that's the whole story but I can't articulate why. What am I actually buying at that price, and is there a cheaper version that isn't stupid?

Rena Guide · Accepted Answer

Breaking the quote into what's behind it: forming the LLC is mostly a form, and the state filing fee is separate and runs anywhere from about $50 to several hundred depending on the state. The operating agreement is where drafting time actually goes, because it says who owns what, how decisions get made, and what happens when a member dies or wants out. A generic template will cover the easy years. The deeds are short documents with consequences, and the choice between a warranty deed and a quitclaim affects what you've promised and can affect your existing owner's title policy coverage. Coordination usually means ordering a title check for liens, getting the recording done correctly, and dating everything in the right order.

$1,900 for that, in most markets, is an ordinary number rather than a bargain or a gouge. Recording fees and any transfer tax are on top, and whether a transfer to your own single member LLC is exempt from transfer tax varies by state, sometimes by county.

The thing that bites people who do this themselves: your mortgages almost certainly contain a due-on-sale clause that treats a transfer of title as a triggering event. Lenders often don't act on it, and there are federal protections for certain transfers that may or may not fit your facts. That's a question for your attorney and for your servicer in writing, not for a forum consensus.

Also call your insurance agent before the deed records. The landlord policy has to name the new owner or a claim gets ugly, and the premium can change when the named insured does.

marcus_hale41 · Answer

The deed being one page is true and irrelevant. The work is deciding which deed, checking whether recording it trips anything in your loan or your title policy, and making sure the entity that receives it exists properly on the day the deed is dated. I've seen a file where the deed was recorded three weeks before the LLC was effective. That's a $1,900 problem to fix, and it was free to avoid.

priya_n21 · Answer

Does putting them in an LLC even do anything if there's a loan in your personal name? I always assumed the bank still comes after you.

laurenkim53 · Answer

marlow, the loan liability stays yours either way. The entity is about claims from tenants and third parties, not about the note. Separate question, same deed.

thicket, in my county the recording fee is $32 a document and transfer tax on an entity transfer of this type is exempt with an affidavit, but the affidavit language is fussy and the clerk rejects them. Ask what the local practice is before assuming the exemption is automatic.

jordan_ellis2 · Answer

$950 a house for something with a due-on-sale question attached to it seems like the cheap part of the day honestly.

tashaford30 · Answer

I asked an attorney a version of this and she quoted $1,200 for one property, then said the number would be lower per property if I brought her four at once. Worth asking thicket whether the $1,900 already reflects that or whether it's two separate jobs stapled together.

bmoreno23 · Answer

The registered agent thing surprised me when I looked at this. That's another $50 to $300 a year forever, on top of any annual report fee your state charges, and nobody mentions it when they tell you the LLC costs $100.

Quoted $1,900 to move two rentals into an LLC. What part is real work?

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