Steven,
Excellent Question… The term “Subject to” is commonly called an escape clause and is written in the original agreement such as
“Subject to interior inspection”
“Subject to Buyers partners approval” (if working with partners)
“Subject to locating acceptable tenants”
“Subject to Acceptable Contractors bids for repairs”
These are a few we use, I was taught to always have an out in case something comes up during inspection (due dilligence) that makes be rethink my position and the deal.
Pat
I think I’v read just about everything on this site and don’t remember anything about “subject to deals”. If I’m missing something please let me know where I can read about it. Thanks everyone
Also does anybody have any comments about Legrands Fast Cash course sold on this site? Is it good for someone new in REI?
Posted by Maurice(Ca) on June 18, 1999 at 15:15:38:
I’m a newbie…so this is just my 2cents…
“Subject to” deals are where you take over the sellers monthly payments subject to the existing loan terms. You are not qualifying for this loan & you are not assuming it in the sense of you taking over the loan in your name. The seller is still liable & it’s still on their credit. This usually happens when someone is behind on payments & instead of getting a foreclosure, they allow an investor to catch up the back-payments & then take over the payments…they just walk away. It is very professional to let them know that they’re still liable.
There are forms you should have them sign (look on www.legalwiz.com I believe) to protect you.
I had an owner willing to sign me over his property this way, but when I researched his loan & his payments, it just wouldn’t work for me. Also you have to make sure they are not already in the foreclosure process.
As far as Legrand, My partner & I have his courses & they are excellent…helped us get our first wholesale deal!