If I foreclose, will my husband's credit be ruined, or just mine? What else should I be doing?

I have a rental property in my LLC, which only has my name on it. My husband, however is on the promissory note. I have removed my name from my personal home deed and have left only him on it. (my lawyer said it wouldn't matter if we divorced, I would still get half of the house) We have done these things at the advice of our real estate attorney to separate our business (LLC) as much as possible from our personal property in the event of foreclosure on our rental property.If I foreclose, will my husband's credit be ruined, or just mine? What else should I be doing?
Why would you want to have a foreclosure on a rental property? Or for most part any property? The home is in an LLC's name. Meaning the corporation would get bad credit. But the biggest mistake was you didn't place the loan in your LLC's name. Your husband will get bad credit and be foreclosed upon. The next time you and your husband want to purchase a home or refinance you might not get the rate you rightfully deserve because his credit will suffer.





My advice is to pay the mortgage on time even if your renters are not paying you on time. Pay bi-weekly if it is better for you. Paying bi-weekly will reduce the term of your loan by years. A 30 year will be paid down in 23 years.


If your payments are too high on the rental refinance or sell. Don't wait until it is too late.If I foreclose, will my husband's credit be ruined, or just mine? What else should I be doing?
You must be in a community property state because otherwise signing the house over to him means it is his to do with as he pleases, even give it away and you could do nothing.
They foreclose on the promissory note against your husband and assert their property interest against the LLC to show that they have paramount title in accordance to the mortgage.


Credit wise your LLC and your husband will take a hit. If you are in a community property state (10 of them) then you will have the opportunity to assert your 50% community property claim in court and your husband can not deed the property without your signature.
What's important is the promisary note. If you both signed as individuals, then you both promised to pay back. If the promisary note is written as a company and your husband has signed as an officer of the company that's diferent, the company would b the responsible party. In this case if the bank forecloses, they will take the asset pledged to guarantee the loan. If the bank cannot sell the property to cover loan and costs they may pursue other legal remedies. That is usually called a deficency judgement. The judgement would be against either the LLC if that's how the promisary note was signed or you individually if you gave your personal guarantee.