Subject to questions - Posted by Joel David

Posted by Aaron on March 07, 2002 at 15:55:15:

Here’s what I’ve learned so far…hopefully, someone will correct me if I’m wrong:

  1. The seller is signing over the deed to you, as well as giving you the power of attorney to make the loan, tax, and insurance payments in his name. Usually the seller has little in the way of equity in the house, so that’s not an issue. Otherwise, you may end up paying the seller some money. I had a friend recently buy a house subject-to and gave the seller $2K for moving expenses. The guy was pretty hard up.

  2. The lender CAN call the note due, but they don’t do it that often, or ever (so I’ve been told). There’s a way to obfuscate the transaction using land trusts, but I’m not that familiar enough with them yet.

  3. Some agreements allow the seller to buy-back the house for $1 if the buyer defaults on the payments.

Subject to questions - Posted by Joel David

Posted by Joel David on March 07, 2002 at 15:44:33:

Just doing some research into subject to offers and I have a few questions.

  1. Is the seller simply signing over the loan and the house to you? In other words they do not get any $$ from the sale assuming there is some equity, they just get out from under the debt?

  2. If the bank gets news of this can they call the loan due or is this not possible?

  3. Does the seller have any recourse if you do not make the payments on the loan that is technically in their name?

It seems like a great way to get property if the sellers are willing to do it.

Thanks -