Quick "Subject To" question... - Posted by Chris JP

Posted by David Alexander on January 24, 2002 at 18:01:37:

list properties for other folks also…

You don’t own any properties… you just run a website…

David Alexander

Quick “Subject To” question… - Posted by Chris JP

Posted by Chris JP on January 24, 2002 at 07:25:04:

From reading one of JohnBoy’s archived “newbie” posts, my understanding of the “subject to” deal sequence of events is:

  1. Owner X uses a “warranty deed” to deed the property to a land trust, in which X is the beneficiary.
  2. Only the deed naming the land trust is recorded.
  3. At the property sale, X assigns their beneficial interest to the buyer Y, with an assignment form which is notarized, not recorded.

Makes sense, but two questions:

  1. How does Y then get property taxes shifted over to their name, so they get the tax bill in the future? Does Y just show the notarized assignment form to the tax folks at the courthouse?
  2. Does the fact that taxes and hazard insurance are no longer paid from the original mortgage’s escrow account send a warning flag to the mortgage company? Don’t mortgage companies have a requirement (and monitor) for hazard insurance to be held on the property?



Re: Quick “Subject To” question… - Posted by TRandle (TX)

Posted by TRandle (TX) on January 24, 2002 at 07:47:21:

In Texas, the deed is required to have a mailing address. Therefore, the land trust mailing address just happens to be mine. That solves the property tax issue.

If taxes and insurance were originally escrowed in order to be paid by the lender, a land trust does nothing to interrupt that process. The terms of the monthly payment will remain as they were before.

I typically cancel the seller’s policy, get any pro-rata refund, and place a new policy on the property. Occasionally, I’m able to charge that cost to the escrow account, but more frequently, I pay it out of pocket the first year. The second year the escrow account handles it.

And unfortunately in Texas this year, the average cost for a basic dwelling policy on a 125k starter home has jumped to almost $1,000. If you buy a few homes, that can start to hurt.

There may be a better way to handle these issues, but I’ve yet to see anyone offer a simpler solution.


Why is the insurance so high? - Posted by DC-IL

Posted by DC-IL on January 24, 2002 at 14:01:29:

I was just wondering why the policies are so hi in TX? My own home happens to be around this price range and I pay about 1/3 of that amount.

Re: Quick “Subject To” question… - Posted by david Garcia

Posted by david Garcia on January 24, 2002 at 12:22:41:

Let me see if I understand this.

1st. I have seller sign a warranty deed over to me.
2nd. I create a land trust.
3rd. transfer property to land trust.
4th. transfer benefits from trust to buyer.
5th. send a letter to lender that this transaction occured.
6th. Sell or lease option property to another buyer & get money.

Mold… - Posted by TRandle

Posted by TRandle on January 24, 2002 at 14:26:53:

Yes, our rates have about doubled from a year ago due to all the mold claims within the state. Additionally, it’s getting very difficult to find someone who can issue anything but a very basic landlord policy.

Re: Quick “Subject To” question… - Posted by TRandle

Posted by TRandle on January 24, 2002 at 13:26:35:

I have the seller deed the property into the trust, not to me. Immediately after that, the seller assigns the beneficial interest in the trust to me. I don’t notify the lender.

I would highly recommend getting a course that deals with these issues. Alternatively, find someone close to you that’s done quite a few and have them walk you through it. It’s not difficult, but you do want to take the appropriate steps and in the correct order.

Re: Quick “Subject To” question… - Posted by Brian(NJ)

Posted by Brian(NJ) on January 24, 2002 at 14:39:30:

Without sounding like a complete idiot, I was just wondering what the advantages to using the land trust would be? Why would you use a warranty deed first? and do you only do this a “subject to” situation?

Re: Quick “Subject To” question… - Posted by TRandle

Posted by TRandle on January 24, 2002 at 15:54:28:

I use the trust for privacy. Having the trust own the property shields the title transfer from the lender and helps protects the property from liens and judgments.

A Warranty Deed is the best deed to get. In some states I think you must use the Warranty Deed to Trustee because it’s required for that situation. I did that initially and then discovered I can use the regular Warranty Deed without disclosing the trustee’s name.

Yes, currently I only use trusts for Sub2’s, but I will begin doing that for our cash deals in the corp as well, again, for privacy purposes. Since my holding times have increased, I don’t like the exposure of having multiple properties easily found in the tax records.

And, if I was smart, I would have a separate buy and sell website. It’s difficult to play hide-n-seek when I have numerous properties listed on our one and only site.