MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

Don't Fear the "Due on Sale" Clause 🏘️

6 May 2026 · 1 min

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0:59

In this advisory segment, the speaker outlines essential best practices for properly operating a Limited Liability Company (LLC) that holds rental property. Key recommendations include establishing a dedicated LLC business checking account, ensuring the property deed is titled in the LLC’s name (or transferring it if initially owned personally), and understanding that the due‑on‑sale clause typically does not pose a problem as long as the mortgage remains current. The speaker also stresses the importance of conducting all lease agreements, invoicing, service contracts, and communications under the LLC’s name rather than the owner’s personal identity, to maintain clear legal separation between personal and business activities.

Chapters

You need to be operating this LLC properly. Let me go over some common things. I set it up right in the right place with all the right pieces and parts. I'm done. You actually need to use it. Okay. Examples. Okay. First thing, everyone will need this: a bank account. Not your personal bank account. A bank account in the name of the LLC. This is an LLC business checking account. You're going to receive your income in that business from it. You need to be conducting business in the name of the LLC. If this is a rental property LLC, the deed to the property better be in the LLC's name, not in yours. And if that's fine, you bought the property in your name, you can deed it over to the LLC. There's no due-on-sale clause. Don't worry about the due-on-sale clause. The banks don't care about that as long as you're still paying the mortgage. But also, what about the lease? Is that in the name of the LLC? Is that in your name? If you're a business selling goods or services, are you invoicing clients in the name of LLC? Do you have a service agreement in the name of the LLC? Are you emailing them in your capacity as an owner of an LLC, or is the LLC in business rather than just your personal email, and blurring the lines? Are they dealing with you personally? Are they dealing with the LLC? So you gotta operate in the name of the