Subject To Deal - Posted by Sheik

Posted by Mike on February 26, 2001 at 20:43:06:

I’m wondering if someone could shed some light on the benefits of a subject-to deal. It sounds like subject-to deals allow for assumption of a mortgage without assumption of the associated liability. Is this the major benefit or are there other benefits that I’m missing? What paperwork (and wording) is required for these subject-to deals? I greatly appreciate your help.

Subject To Deal - Posted by Sheik

Posted by Sheik on February 26, 2001 at 10:41:51:

This is my 1st Subject To deal so please bear with me :slight_smile:

Seller is concerned that in a year or two, after he
has managed to get his financial act together, it
might fall apart again if I choose to stop making payments
on the mortgage.

How do you fellas address the seller regarding this subject.


You are fixing his credit for him. - Posted by DaveD(WI)

Posted by DaveD(WI) on February 27, 2001 at 10:23:03:

Remind him thanks to you, you are helping him manage to get his credit fixed up. After all, you have to make the payments to reach your endgame. Seems to me he should be jumping for joy you are fixing his credit and saving him a foreclosure. Provided he gets the rest of his life in order, you’ve put him on a fast track to better credit.

Re: Subject To Deal - Posted by B.L.Renfrow

Posted by B.L.Renfrow on February 26, 2001 at 18:00:17:

Hey Sheik,

Glad to hear you are doing subject-to deals. They’ve become my favorite kind.

That’s a question you’ll hear from almost every subject-to seller, except for the ones who are so desperate they simply don’t care. I tell them that yes, indeed, if I did stop making payments the lender would surely come after them and their credit could get trashed.

Then I ask them to stop and think about it. I point out that I make most of my profit when I sell, so I will be looking to pay off their loan at some point. I tell them (truthfully) that if I stopped making payments that I’ve agreed to make, I wouldn’t be in business very long. And, I point out, if true, that their credit is already teetering on the brink, so my paying their loan on time can only help them. If they’re still wavering, I offer them references (haven’t had anyone take me up on that yet).

If all else failed, and the deal warranted it, I would offer to sign a quit-claim deed back to the seller and have it held in escrow in case I ever became more than x number of payments delinquent on the note. The escrow agent could be given instructions to record the deed if that occurred.

Brian (NY)

Re: Subject To Deal - Posted by Terry (Houston)

Posted by Terry (Houston) on February 26, 2001 at 10:54:42:

Tell him that you would have too much financial involvement to just walk away from the deal.

If you are doing repairs, paying taxes, making up payments and have a buyer in place you are responsible for why would you walk away?

The other piece is that you would escalate his getting his finacial act together by making the payments on time everytime and hopefully will have it sold in a year or two.

Good luck.