Anyone SELL using subject to? - Posted by Mike

Posted by HR on March 02, 2000 at 02:24:20:


You got yourself a smart fish at the end of your line. Think about it: with an installment land contract, the buyer doesn’t get title till the final payment is made. If you sell and give him the deed, he gets title right away. It is ALWAYS better to get title (deed) whenever possible. In my state, it is far harder for me to get the house back should this cat default after getting title than it would be to get the house back if I had sold him the house on an installment land contract. I suspect the same is true in your state. Hence, his reason for wanting the deed and not an ILC. (I’m not suggesting he plans on defaulting; he’s just putting himself in a better position of strength. A smart move on his part).

Become a control freak, Mike. Buy and sell and put yourself in control of the transaction as much as possible. You haven’t given any details about the deal; given the scant info available, I’d say you have yourself a knowledgeable buyer. Become a knowledgeable seller and stack the deck to your benefit.

Good luck!


Anyone SELL using subject to? - Posted by Mike

Posted by Mike on March 01, 2000 at 18:01:42:

I have a potential buyer but he doesn’t want to do the contract for deed, but wants the deed. If i did this in a trust would i lose all control of who the trustee could be? Would appreciate any pros or cons from the knowledgable folks on here.


Re: Anyone SELL using subject to? - Posted by MDonovan

Posted by MDonovan on March 02, 2000 at 10:51:50:

Use a land trust. You should agree on an attorney to use as the trustee. He will lose his practice if he does not abide by the instructions of BOTH beneficiaries.

Also, use a loan servicing company to handle the mortgage payments. Tell them to notify you if the payment is one day late. Or do a wrap and have them notify the buyer if you default.

Make the buyer’s note secured by the beneficial interest in the trust. Foreclosure will be quick and easy.

This will also shield the title from any actions. From the buyer, from you and from external lawsuits.

Re: Anyone SELL using subject to? - Posted by Steve-Atl

Posted by Steve-Atl on March 02, 2000 at 08:40:59:

I NEVER sell subject to. You as the seller lose control. I only use subject to when buying.

Tell the buyer that the only way you will sell is with the contract for deed. You can tell him that he will get the deed when he can qualify for a new loan to pay you off. Until then he gets to live in the house and have the equitable interest that the contract for deed gives him. To make him feel better you could record a notice of the contract for deed.

Also,you might put a balloon in the contract for deed far enough out in time to allow him to get his act together for a new loan. If he can’t live with that, then this may not be the house for him.

There are plenty of other potential buyers that are attracted to owner financing but don’t understand the implcations of subject to vs. contract for deed.

I Agree 1000% - Posted by Rick W.

Posted by Rick W. on March 02, 2000 at 04:33:22:

HR is right on the money. If you sell the house and convey the title to a property with a loan you have taken “subject to” from your seller, the new buyer can default at any time. If this happened, it would cause immeasurable damage to your SELLER’S credit and financial position, not to mention making your life a living H*LL! (I have the battle scars to prove this).

Take advise from someone whose entire business is concentrated in buying/selling just this way and learned lots from his mistakes. Sell on a Contract for Deed (ILC, Agmt. for Deed, etc), or Lease/Option, but DO NOT put yourself in the position of having to defend yourself or your integrity to a Seller because he got a foreclosure filed against him on a loan you gave up control over!


Rick W.