Posted by Jim IL on January 18, 2001 at 20:10:09:
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.
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.