Buying a property that was put into an LLC after the lien

Here’s the background for my question: Person A buys a property (as an unmarried man) and gets a 1st & 2nd loan. So the recorders office shows a grant deed (for full value) and two deeds of trust. A few days later Person A records a grant deed transfering the property to Business B (LLC). There is no transfer tax on this second grant deed. on the grant deed it says “putting property in LLC” and scrawled in handwriting: “proportional interest remains same”. No idea if this handwriting is a statement by the filer of the document or the county.

Several years later there’s an NOD & NTS in the name of Person A citing the 1st. There’s a HOA lien in the name of Business B. And there is an unsecured Tax lien on Person A that doesn’t appear attached to any property. Though Person A had been busy buying properties with & without Business B, I wade through a ton of records and can’t find a reconveyance for the 1st lien under either Person A or Business B. No guarantee that I didn’t miss something since there a so many and some seem to have differing spellings.

Foreclosure radars info seems to jive with what I’ve found in the recorder’s office (except it doesn’t have the HOA lien or the Tax lien).

If I were to buy this property at auction would that recorded grant deed to the LLC cause me any problems? Anything else title-related I should be investigating? I suppose I should check if that LLC is really wholely owned by Person A, but I’m not sure how to do that, and not sure if its even possible.


Hi Don … Switching title over to an LLC offers a measure of anonymity and some personal liability protections to the owner, but any such title “switcheroo” will not prevent foreclosure.

It’s surprisingly common to see a sudden title transfer as a DOT is moving closer to a trustee sale (courthouse steps auction). Many times a title transfer may be to a party who is in a better position to get new financing, but again, this will not prevent foreclosure if the loan remains in default.

Sidebar: There are scam artists out there who prey upon the desperate/gullible (in the midst of foreclosure), and convince them to “deed the property over” to some other company who will them give them a “loan.” Despite the foreclosure, these “targeted” properties have equity and the “rescuing angel” is out to steal that equity. At the last minute, the loan terms are changed to “loan to own” (extreme “hard-money” to someone in no position to repay) and/or the loan is never made.

Hi, thanks for answering Danny. I guess my concern is mostly what happens after I buy a property like this. If the sale gets canceled my efforts so far are wasted (again), but that’s the game. Can the grant deed to the LLC cloud the title by causing some kind of potential challenge after a courthouse sale? And what if the LLC declares bankruptcy, either before or after the sale? (very possible since this LLC seems to be holding a lot of properties bought near the peak)


Foreclosure law provides substantial protections for lenders. The property owner transferring title to an LLC should not preclude the lender from foreclosing, nor your ability to assume ownership via a trustee sale acquisition.

The owner could of course attempt to forestall the steps auction via various negotiation (owner v lender) tactics, including a bankruptcy filing. But once the BK is discharged, the steps sale will in all probability move forward. Some “simple” BK cases are concluded relatively quickly … others can drag out for months. I have also heard tell of some lenders being granted a waiver (from BK judge) to move forward with a trustee sale before a BK has been discharged … but that is the exception.

The BK filing must be done before the steps sale if the owner hopes to keep hold (temporarily at least) of the property. I have seen anxious homeowners rushing to the steps waving BK papers … Usually the auctioneer will make sure the homeowner has faxed in the “properly executed” BK papers to the trustee … they will give them the trustee’s fax line # and sometimes even move the order of the morning’s sales (if clearance was given to sell that property) to give the frantic homeowner time to formally notify the trustee. Steps investors are in no rush to buy a DOT IF a BK was properly executed BEFORE the scheduled trustee sale … as the sale would later be rescinded.