We recommend entering into a new mortgage and loan agreement with the new LLC, rather than attempting to modify the original loan to reflect both a new borrower and new property owner. While the LLCs have two owners in common, they should be treated as distinct entities and as separate borrowers. Entering into a new mortgage and loan agreement will ensure that the new LLC is obligated to repay the loan and that your bank has a valid mortgage on the property securing the loan.
One of our business customers is an LLC with three members. After the LLC entered into a mortgage loan with our bank, the LLC transferred the property securing the mortgage to a new LLC, which is owned by two of the three members from the original LLC. While this property transfer did violate our loan agreement, we would like to renew the loan with the new LLC. Can we modify the existing loan or do we need to redo the mortgage and loan agreement altogether?
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