Question regarding transferring a condo title to an LLC and rental restrictions

Technically, you are not still in ownership. This is the price you pay for the protections achieved by transferring ownership to an LLC.

What an interesting question.

In my opinion the three year clock re-starts the instant ownership is transferred to the LLC.

For legal reasons, you do have an obligation to inform the HOA that the LLC is now (or soon will be) the owner.

If I were you, I would ask the board if it would waive the three year requirement, given everything. I bet the board grants a waiver. Though if I were on this board, I would vote against granting a waiver. I would also be working on limiting the percentage of rentals in the condo community.

You are better as an "S Corp" than an LLC. I call an LLC "Whomever draws the short straw does the prison time". It's best left for multiple owners than single.

Here is what you should do. 1st and foremost write your lease that it included following the HOA rules. If they violate the HOA rules, you still have to pay the fines, but you have the power to kick them out. If you do not have this in your lease agreement, then tenants rights will overrule as it's not a condition of the lease. This is NOT in a boilerplate lease agreement.

The good news having a rental your HOA dues and any repairs are now tax deductible. They are NOT if you own and live in the home. When I rented, I would sooner fix my rental property than my own. The expenses on the rental was deductible but not on my own home.

Best to find out how to properly go about renting your home with the HOA. They may have final say of yeah or nay. Just make sure you do BOTH a criminal check AND a credit check before renting. Many HOA's just require criminal. Which is pretty limited. A credit check provides YOU with the social security number in case you must take action. Will tell you eviction is NOT an overnight thing. Where I am at it is a 10 day intent to evict. Another 10 BUSINESS day to actually evict. Then you have a 2 week period before the sheriff office can remove. Technically some renters can refuse to pay rent upwards to a year and get away with it. So know your Tenant's rights laws for your area.

I agree that the clock would start over.

As for better protections if an LLC - consult with an attorney. It may or may not be worth it.
IRS tax form 1120 is a pain to complete and typically requires a CPA.

Tim is right about talking to a lawyer and maybe an accountant. Transferring title to an LLC has benefits and drawbacks. The downsides include no longer qualifying for a traditional mortgage, no longer enjoying the tax advantages available to an owner-occupant (eg. sheltering a portion of the capital gains if you sell the home), and the added complications of filing taxes in general. I actually looked into doing something similar for the asset protections of an LLC, not because I wanted to rent out my home. I concluded that, for me, there are easier ways to protect my personal assets.

That's a really interesting question to consider. Our three condo sub-associations all have two year restrictions on renting, but I'm pretty sure they would be willing to waive the time-period if you were just converting to an LLC.

However, we have a capital contribution for the master association that is required on change of ownership. I don't know if we would be willing to waive that.

Finally, if you're considering leasing you probably know the requirements of your association, but be prepared that background and rental checks for owners are usually required, a security deposit from the landlord is usually required, and if your tenant misbehaves, the landlord (even if an LLC) is still responsible for any issues or damages.

In my opinion, a transfer of ownership still takes place.

Typically the point of putting a home in a trust is so that, when Jane Doe who originally owned the homes dies, the home will not be a part of the Jane Doe's estate. Meaning the home was not technically owned by Jane Doe.

I continue to think Boards are likely to be generous on the point. I would not, as for one, it may open a can of worms when other owners come wanting xyz, but that's just myself.

LLC vs carrying an umbrella liability insurance policy is what you need to consider. Either option is valid. Both are an expense.

The LLC will require you to keep stringently separate operations records and accounts, plus you pay annual fees to the State and file an additional (if small) tax return associated with the LLC. If you mess up and spend "personal" money on your LLC condo, you run the risk of ruining the legal protection afforded by the LLC structure because a good plaintiff's attorney will show that your LLC isn't separate from You.

The Umbrella Insurance policy will cover you for general liability so, if sued, it's there as a backstop. It, too, is personal protection. Carry a couple million dollars of liability coverage.

Honestly, I had a financial/wealth advisor preach an LLC to me. When I went to an attorney, they said solid insurance coverage will do the trick. A CPA told me that LLCs should be considered once the cost of the liability insurance policies exceed the cost of setting up and maintaining LLCs, including tax prep.

Of course, we all generally disclaim that you should consult an attorney because we're offering our personal opinion from which you make your own independent decisions free from our influence.