Re: "Subject To" Questions - Posted by Bill

Posted by Jason (AL) on April 11, 2007 at 17:58:21:

Hey Bill,

Generally subject to deals aren’t assigned.
At least it’s not wise for one to do so.

Once your seller DEEDS you the property, the property is now yours to do as you please (sell it, rent it, lease/option it… etc. etc.). You would record your deed
at the county courthouse in which the property is located.
I would guess you are “protected” from anything the seller does, as he/she no longer owns the property.

It would be no different had you went down to your local bank and financed the purchase using loan proceeds.
Buying a house subject to the existing financing is simply another way to purchase a property.
Only that it saves you from having to obtain financing, resulting in a faster close.

The DOS clause can be called at the banks OPTION.
Whether they will or not…well, if they’re receiving timely payments, I don’t see why they would.
However, don’t let that stop you from doing any deals.

So, here’s how it would go down:

  1. seller deeds you the property
  2. you record your deed @ the courthouse (you now own it)
  3. implement your exit strategy (sell, rent, whatever)
  4. repeat

Good luck!

Re: “Subject To” Questions - Posted by Bill

Posted by Bill on April 11, 2007 at 16:22:20:

In buying a property “Subject To” the existing mortgage so the “Due on Sale” clause is not triggered, would the buyer, using a standard real estate purchase contract, simply insert their name (Joe Blow &/or assigns)and then when re-selling to their prospect, simply assign that original contract to their buyer? (Hopefully I’ve explained asked this question clearly) To protect oneself, what needs to be recorded if anything? Any and all information is greatly apreciated.

Re: Contract Flip Answer! - Posted by David Butler

Posted by David Butler on April 17, 2007 at 10:26:30:

Hello Bill,

Yes… The method you describe is the simplest way to accomplish a “flip” using the “subject to” strategy, or otherwise, so long as you have covered all the bases in making that contract. In fact, a well-drafted purchase contract, with the appropriate contigency clauses, accomplishes all of the benefits of an option agreement, without the requisite consideration and/or performance requirements.

In such a transaction, recording a memorandum referencing the contract can be done, but in my opinion, that process would likely be overkill. Other investors might disagree, and recommend that you record something every time you enter into such an agreement. Be aware however, that to record, you will need to have the property seller sign the purchase contract, and/or the memorandum referencing to it - in front of a notary public… as the records offices throughout the country require grantors to “acknowledge” their signatures.

In any event, the contract itself is a form of “protection” - keeping in mind that either way, such “protection” is only as good as your ability to go to court to fight for your position.

Good Hunting and best wishes for your success!

David Butler