John Smith, a single man, purchased a property as his sole and separate property. After close of escrow, John Smith formed an LLC for tax purposes. John Smith then transferred ownership of the property by executing a Quit Claim Deed from himself to his LLC.
Is the title insurance policy affected when an individual transfers his property into an LLC?
An LLC is a legal person, therefore, the property is now owned by the LLC, not John Smith. Therefore, John Smith would no longer have title insurance on the property unless he paid for an additional insured endorsement.
Best business practice tip: If an individual is transferring ownership of a property into an LLC, or other entity, he/she should consult with a title company for information on obtaining an additional insured endorsement.