Vince,
Remember, I am not a lawyer, so anything I say here is based on my own limited experience.
With that said, lets see here.
On “subject to” deals where the seller was not totally confortable with leaving the loan in their name and wanted some security, I have done a couple of different things.
I have managed to get some sellers to allow me to sign a quit claim deed to be held in escrow.
Along with that, there is a clause in the agreement that states, if I as the buyer fall behind on the loan payments by more than 60 days, the seller has to notify me in writing within 30 days after that point, giving me 30 days to bring the loan current.
IF I fail to do so, they can then record the Quit claim deed.
Frankly, this seems to put the sellers at ease, and most of the time the Quit Claim deed stays with me.
I have several in my file cabinet here in the office.
Since I do not plan on defaulting, this was an easy way to make the seller feel better and sign with me.
Another way may be to use a performance mortgage, which basically promised to the seller that I will as the buyer perform certain things according to our agreement, and if I fail to perform, they can foreclore on me using the performace mortgage, taking the property back.
HTH,
Jim IL
P.S. To be perfectly honest, 99% of the subject to sellers have not needed any of this. Most of my subject to deals are from truly motivated sellers.
Hello again all. I’m still plugging away. I have 3 deals pending and I’m feeling a bit alone out here not knowing exactly what to do to make them happen.
Anyway, NOTHING’s gonna stop me!!! Here’s the latest deal scenario:
I have a seller who is in the middle of a no-contest divorce. Wife is gone and he’s pretty depressed. He wants to sell the house for what they owe on it. The home was valued at $80k about 9 months ago but that was before new carpeting, new double pane thermal windows, new bathroom, new kitchen, remodeled laundry room, brand new roof from the plywood up and a new fence. We’re figuring it would appraise for just a tad more now (smile).
The seller’s ad said he just wants someone to take over his payments on his underlying $65k mortgage! I’m thinking I smell a deal here.
My question is: “how should I approach it?” I don’t have good credit scores or anyone who I could partner with so what other alternatives do I have? Please give as much detail in your answers as possible so they will sink into this thick scull of mine (smile).
You have all really motivated me to get going and I’m going like gang busters. I just don’t have a clue how to enter a deal, how to structure the paperwork, how to structure an exit, or how to structure the exit paperwork. But NOTHING’s gonna stop me!!!
Looking forward to your posts. If you want you can email me if your answers are too long for the board here.
Remember that if title is in both their names, you’ll need the wife’s signature on any agreement of sale too. If she’s “gone” you’ll need to find her and get her agreement.
Vince,
The seller has already told you that he “just wants someone to take over his payments”, right?
Why not offer to do just that?
You can accomplish this several different ways.
My preferred method is to get the deed, or buy subject to, as we call it.
If the seller objects too much to the loan staying in his name while title transfers, then a L/O could also work.
Just make the price be “Mortgage balance at time of close”, and the rent as the payment he has.
Jim,
I would imagine that on a subject-to deal the seller may be a bit uncomfortable leaving the financing in his name while I have the deed. Are there any good ways of protecting the seller’s interests to make the deal that much more appealing to the seller?
Also, should the wife simply quit claim the property to the husband and then the husband sells or should I have the husband and wife simply sign the sales contract? Will that be enough protection for me?