Buying Subject To - Posted by JPinPA

Posted by Rob FL on January 26, 2001 at 08:01:48:

Thanks for your help on this issue William.

Buying Subject To - Posted by JPinPA

Posted by JPinPA on January 24, 2001 at 15:30:44:

Before I begin, please allow me to thank all of you who answer questions on this forum. For nearly a year I have followed this site. I’ve been sitting in the back of the “classroom” and soaking up all the info. You are truely amazing.

As Ed would say, now it’s time to hit the streets. I have studied both Bronchicks L/O and Cash Cow Courses and know the basic mechanics of the purchase. My problem is that as I mentally walk through a “subject to” purchase, I’ve not come up with a natural flow of the transaction. Let me explain…

  1. At the sellers home an agreement is reached. A P&S Agreement is completed but the seller may not know the exact amount that is owed on the underlying loan until the next day when he contacts the bank. What do you do?

  2. When do you complete the Land Trust Agreement, Assignment of Beneficial Interest, CYA Disclosure, Escrow Agreement, etc…? Is this done at the kitchen table or is this handled by your attorney or title co.?

I guess what I’m looking for is a flowchart with some typical timelines for paperwork.

How do you Pro’s do it?

Thank you in advance!


Now I get it! Thank You. (nt) - Posted by JPinPA

Posted by JPinPA on January 25, 2001 at 06:10:56:


Re: Buying Subject To - Posted by Bud Branstetter

Posted by Bud Branstetter on January 24, 2001 at 21:48:28:

Not that I buy subject to any more but it would be the same way. When I did foreclosures I carried a deed with me. Not only would you have them sign a contract but you would have them sign the deed. The legal description and Grantee could be filled in later. Depending if you have confidence that you are going to make the purchase you could type up the deed to trustee before hand. Where the legal would go you leave blank until you get a copy from their deed. You can go back and run it through your printer again to add the legal description.

Because it will take you a number of hours if you are going to type up the documents I would be pretty sure before I did all the work. I come back a day or two later to do the actual closing. A card table and chairs work fine for a vacant house. If they are motivated they won’t care. If it is a high end property and they arn’t sure you may want to be a bit more professional.

Re: Buying Subject To - Posted by B.L.Renfrow

Posted by B.L.Renfrow on January 24, 2001 at 20:04:16:

I do things pretty much as William outlined. If the seller is in a hurry I’ll go ahead and have them sign off on everything before I’ve completed my due diligence. I just make sure they know nothing is final until I record the deed. I’ve only had to trash one deal, when I found a hefty second mortgage and a tax lien the seller “forgot” to tell me about.

Although I have taken a notary friend along to the seller’s house, I usually just have the sellers meet me at my attorney’s office, we do the signing at the front counter and his secretary notarizes where needed. For some sellers, doing it in the attorney’s office – even though he’s not involved directly – adds the air of legitimacy they need to feel comfortable.

If you’re contemplating doing subject-to deals using a land trust, I would strongly urge you to get Bronchick’s land trust course. It has the forms you need and tells you exactly how to fill them out.

Brian (NY)

Re: Buying Subject To - Posted by WilliamGA

Posted by WilliamGA on January 24, 2001 at 17:03:12:


When I purchase subject to, this is how it usually goes…

  1. Seller calls. I prequalify them pretty heavily on the phone. They usually have a good idea of what I am offering to do before I set up an appointment to go out and see them. By this I mean that I have at least introduced them to the idea of me simply taking over payments on their property. I have a “close” estimate of what “they say” is owed on the property. By “they say” I mean that more times than not, I find that there is more to the story than they tell me up front. Not always, but most of the time.

  2. I go out to meet with them. look at the house to see if it “qualifies”. Sign up the sales agreement and we are off to the races. If they don’t know the exact amount owed on the loan, thats ok. I will just put “Appx. $XX,XXX” in the space where it says “Loan balances taken subject to”. They should have a old payment coupon around that will give you the balance, if not, no sweat. Since I also have them sign an “Authorization To Release Information” on their loan, I can call and get the balance.

  3. Once I have the property tied up, I can check and verify all the info they have given me. Loan balances, liens, clear title, any inspections I choose to do. Since it is locked up I can take my time with the due dilligence and things can progress along at my pace usually.

  4. After I am satisfied that all the info is accurate or at least that there is a real deal here, we are ready to close. I have done a few of these so I just print off the trust docs myself and we go anywhere that there is a notary to sign off on them or I can bring my friend who just happens to be a notary. :slight_smile:

  5. Once the docs are signed, all you have to do is go file the deed at the courthouse and the property is yours.

This is how I do it. I am sure that there are as many ways to get it done as there are investors doing it. You CAN use an atty if you like. Might be a good idea for your first one or two.

If you can find an atty that knows how to put one of these trust deals together, let me know. LOL

Good Luck!


“Subject to” docs. - Posted by david garcia

Posted by david garcia on January 25, 2002 at 24:17:13:

can someone fax me the documents that they use for subject to deals?
(240) 539-0653 fax

How about title insurance? - Posted by KatieFL

Posted by KatieFL on January 26, 2001 at 19:21:21:

Do you order a title search and/or insurance to make sure there is a deliverable title or do you skip it? Thank you.

Re: Buying Subject To - Posted by Gigi

Posted by Gigi on January 24, 2001 at 21:43:36:

Thanks for the info. How do you handle your insurance?

Helpful Clause for Loan Amount - Posted by Vic

Posted by Vic on January 24, 2001 at 21:04:08:

I got this from our Bond for Deed contract (land contract) here in Louisiana.

When the loan amount is unknown, instead of just putting an approximate amount. Add a clause that states that if loan amount exceeds the approximate amount by more than $500 (or whatever amount you choose)then seller has the right to void the contract.

This makes it clear to seller that you have the option to back out if loan bal. is too high. If you just put an approx. amount, you could end up in a situation where what you think is not approximate, the seller may consider approximate.

Hope this helps some,

Re: Buying Subject To - Posted by AMP

Posted by AMP on January 24, 2001 at 19:52:07:

Thanks for walking us through an example William.

One question…do you prepare any kind of closing statement, like a HUD-1, to give to the Seller?


Thanks For The Example - Posted by phil fernandez

Posted by phil fernandez on January 24, 2001 at 18:15:10:


It’s really that simple.

Re: Buying Subject To - Posted by WilliamGA

Posted by WilliamGA on January 24, 2001 at 22:24:27:


I just call my insurance agent and have him take over as the agent for the property.

I used to try to get the sellers to call their ins co and tell them that they were placing it into a trust, yada, yada, yada but that got to be too time consuming to get all the different ins. companies educated on trusts and such.

Easier to just sit down with ONE agent and get him up to speed and then let him handle all of them.

Re: Helpful Clause for Loan Amount - Posted by David Alexander

Posted by David Alexander on January 24, 2001 at 22:20:50:

Except that you would want to put “Buyer has the right” to void the contract otherwise your giving the seller the right and Yourself no out.

I pretty much just use a subject to Inspection clause in my contracts and clear title.

If $500 dollars would kill the deal then your in trouble anyway.

David Alexander

Good Idea, Vic! (nt) - Posted by WilliamGA

Posted by WilliamGA on January 24, 2001 at 21:23:02:


Re: Buying Subject To - Posted by WilliamGA

Posted by WilliamGA on January 24, 2001 at 21:19:48:


Yes, as a matter of fact I do. Just recently found a site that had fillable HUD 1 forms that you can D/L in PDF format. Started using them then.

Re: Buying Subject To - Posted by steve

Posted by steve on February 09, 2001 at 06:58:57:

When did you change your mind on the insurance?? Why did you switch?


Re: Buying Subject To - Posted by Rob FL

Posted by Rob FL on January 25, 2001 at 09:56:07:

If the insurance is escrowed with the mortgage payment (PITI), do you cancel the old policy and do a new policy? The lender would have to be notified of the changes in this case.

Oops! Sorry! I Meant Buyer Has Right, Also… - Posted by Vic

Posted by Vic on January 26, 2001 at 06:25:26:

I don’t think $500 would matter all that much to a deal. I think you might have missed my point though. My point was that to the seller if the loan balance comes within $8,000 or so, then to him that might be approximate. To you it may not even be close to approximate. So by putting in a clause such as $500 or so, you eliminate the potential disagreement & potential lawsuit.


Downloadable HUD-1 - Posted by Monique

Posted by Monique on January 24, 2001 at 22:23:02:


What’s the website that you found with a downloadable HUD-1 form?