Will an LLC Transfer Kill Your Title Insurance?
Putting your property into an LLC is one of the most common asset protection moves out there. What nobody tells you is that it can quietly wipe out your title insurance coverage. I wanted a straight answer, so I took the question directly to the title company's attorney. Here's what I learned.
The One Detail That Decides Everything
Moving your property into an LLC after closing can invalidate your title insurance, but only under one circumstance. If you close in your own personal name, then transfer the property into the LLC, your coverage holds. There's a catch, though.
Same Members, Same Coverage
Your coverage stays intact only if the members of the LLC are the exact same people who held the title. Keep the ownership identical and you're fine. Add a member or drop one, and you'll most likely lose your coverage.
Think about what that means. Title insurance protects one of your biggest assets, and it can vanish over paperwork you didn't know mattered.
Check Before You Move
People place their properties into LLCs for good reasons, and there's real value in the strategy. Just don't assume your title coverage automatically comes along for the ride. This isn't legal or insurance advice. It's what I found by doing some research, so check with your title company first before you make any move.
A quick phone call before you transfer the deed can save you from a costly surprise later. Know the rule, keep your members consistent, and confirm it with your title company before anything gets recorded.
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Rob Swan | Qualifying Broker | Swan Realty Inc.