“Subject-To” Deal… - Posted by Rick Wheat
Posted by Rick Wheat on February 26, 2001 at 06:47:53:
This is all I’ve done for the past three years, and I’ve gotten pretty good at the documentation. My position is that you provide a “FULL DISCLOSURE” of exactly what you intend to do - namely, take over the “responsibility” of the mortgage payments and balance remaining, but NOT the “LIABILITY” of it. In other words, you are taking over the payments of the loan, but it legally remains in the name of the seller until you pay it off.
I have had experience in the past of sellers getting “convenient amnesia” about what was “SAID”. I started covering all our agreements in my “CYA” letter, plus I have an addendum to the P & S Agreement that I have them read and initial. It spells out everything, including what might happen if I somehow can’t make the payment.
Trust me, it’s better to have it all spelled out in writing and signed off on, rather than have an attorney start asking, “Why did you take advantage of these poor people that didn’t understand what you were doing?”
FULL DISCLOSURE! The best way. If it costs you a deal because the sellers weren’t comfortable with it, it’s better to learn now instead of later.