Vested Owners on Title: Ensuring Clear Ownership and Recourse
Rule
To maintain clear legal recourse and streamlined underwriting, Lendency requires a direct 1:1 relationship between the individuals listed on the property title and the individuals serving as loan guarantors. Specifically, we do not allow an individual to be a "Vested Owner" on the title unless they are also a personal Guarantor of the loan. Furthermore, Lendency does not allow for "Multiple Entities" (e.g., two separate LLCs) to be listed as the proposed owners on a single title.
Lendency Insight
In DSCR lending, "Vesting" refers to how you hold the legal deed to the property. Our policy is designed to prevent "silent partners" or "non-recourse owners" from having a claim to the asset without being responsible for the debt. If an individual is on the title, they have the power to sell or encumber the property; therefore, they must also be a party to the loan guarantee to ensure their interests are aligned with the lender’s.
Regarding entities, simplicity is the key to a fast closing. While sophisticated investors often use complex "parent-child" LLC structures, the property itself must be held by a single borrowing entity. This avoids the legal complications of "Tenants-in-Common" (TIC) arrangements between two different companies, which can create significant delays in the event of a foreclosure or a title dispute. If you have partners in a deal, the standard solution is to have all partners own shares in a single LLC that holds the title.
Common Scenarios & FAQs
Can my spouse be on the title if they aren't a guarantor? No. If your spouse is listed as a vested owner on the deed, they must also sign the personal guarantee and undergo the standard credit and background checks.
What if I have a 50/50 partnership with another LLC? To qualify for a DSCR loan, you and your partner should form a "Joint Venture" LLC or a new holding company. That single new entity will be the sole owner on the title, and the two original LLCs will be members of that new entity.
Why can't I use "Tenants-in-Common" for two LLCs? While TIC is a valid legal structure, it is considered high-risk for DSCR products because it requires the lender to manage two separate legal borrowers on one asset. For our program, all ownership must be consolidated into one entity.
Key Definitions
Vested Owner: The person or entity that holds legal "Title" (the deed) to a piece of real estate.
Proposed Owners: The parties intended to be listed on the final deed at the time of the loan closing.
Tenants-in-Common (TIC): A way for two or more people (or entities) to hold ownership in a property together, where each has a separate, transferable interest.