Transfer of mortgage to llc.

[FarmerX]

First off, I know nearly nothing about property law, so if this is a stupid question, you can tell me and we can all be on with our lives.
Now, my parents own a small farm, about 300 acres. They have been trying to sell for 3 years, and there has not been one offer. The main issue is that the irrigation wells need about $150,000 worth of work to make the farm operational. I have been urging them to fix the wells, and instead of selling the land, leasing it, as they would gross roughly $30,000 a year. However they want to buy a new house elsewhere as soon as possible, and they can't get a loan until the farm is paid off.
I came up with the idea to transfer the farm to a llc or some other entity, and then the llc could secure a loan to fix the wells and pay off the mortgage on the farm. Then my parents could get a personal mortgage for their new house. However, I do not know if it is possible to transfer the farm as it is not fully paid off.
Another idea I had was to put the llc in my name, and "sell" the farm to me for the amount of the mortgage, then I could get a loan for the wells and the farm, and pay it all off with the lease money over time.
Is any of this legal? Or possible? It would be better to keep everything in my parents name if possible. Thanks!

 

[FlyingRon]

You can transfer the farm, but that can have very disasterous effects. The existing mortgage may have a due-on-sale clause which could be invoked over such a transfer. The bank that made the mortgage is under no obligation, and explicitly disinclined, to transfer from the parties they approved for the mortgage to another entity especially some assetless LLC. What makes you think this LLC could obtain financing for anything (either to refi the original note or to get money to improve the property)?

Again selling the property to you will not work unless you are willing and able to refinance the property.

There's nothing Magic about LLCs. Inserting them into the mix won't help you.


The options I can see:

1. You folks can sell the farm (perhaps to you, perhaps to someone else) with the known irrigation problems.
2. They can fix the irrigation problems themselves (either via taking out a second mortgage or refi-ing with cash out to do the repairs).

 

[latigo]

First off, I know nearly nothing about property law, so if this is a stupid question, you can tell me and we can all be on with our lives.
Now, my parents own a small farm, about 300 acres. They have been trying to sell for 3 years, and there has not been one offer. The main issue is that the irrigation wells need about $150,000 worth of work to make the farm operational. I have been urging them to fix the wells, and instead of selling the land, leasing it, as they would gross roughly $30,000 a year. However they want to buy a new house elsewhere as soon as possible, and they can't get a loan until the farm is paid off.
I came up with the idea to transfer the farm to a llc or some other entity, and then the llc could secure a loan to fix the wells and pay off the mortgage on the farm. Then my parents could get a personal mortgage for their new house. However, I do not know if it is possible to transfer the farm as it is not fully paid off.
Another idea I had was to put the llc in my name, and "sell" the farm to me for the amount of the mortgage, then I could get a loan for the wells and the farm, and pay it all off with the lease money over time.
Is any of this legal? Or possible? It would be better to keep everything in my parents name if possible. Thanks!

I think that all of us should be on with our lives free of pondering any such illogical financing schemes.

Because unless you personally, or any created entity like a Limited Liability Company, is adequately funded, or deep pocketed guarantors are anxiously standing by, neither would be in a better position to borrow the money needed to bring the farm into operation than the parents. Nothing plus nothing is not something. It's nothing.