Posted by Steve-Atl on December 21, 1999 at 10:00:07:
Yes. I use a “standard” contract that has a fill in the blank for an existing mortgage taken subject-to. It also has other buyer friendly statements such as seller to pay all closing costs. The realtor’s contract doesn’t have these goodies.
The contract is only one step in a proper subject to sale. Be sure you understand trusts and how they work.
As far as getting a deed without such a contract, I don’t know. You probably need to talk with an investor friendly real estate attorney in your area.
I’ve read many posts where people say “they owed 115k, it was worth 150k, they just deeded it to us and we sold it.” Is someone over-simplifying things here? How can you get the deed to a property that is mortgaged?
Re: They just GIVE you the deed? - Posted by John P.
Posted by John P. on December 21, 1999 at 01:13:32:
DS,
I was given a deed on a house tonight the seller is in foreclosure. The house is worth about $117,000. he owes $89,000.+ $6,000. and he is three months late ( about $3,000.00). That totals to $98,000. it does need about 2,000 in clean up. This is my second one the first was a four plex ( this was last week) the owner is 1 month behind and did not want the headache.
Re: They just GIVE you the deed? - Posted by Steve-Atl
Posted by Steve-Atl on December 20, 1999 at 19:53:25:
I asked the same question when I started in REI. Its hard to believe for beginners but YES, it is possible because the mortgage and deed are two separate documents. A seller can deed a property to a buyer and the buyer then makes the payments on the existing mortgage. The loan stays in the seller’s name, but the buyer has title to the property.
This, if not done properly, could cause the lender to call the loan due-on-sale. This seldom happens, but it could. You’ve got to realize the possiblilty and be willing to refinance or sell quickly if it happens.
See a string below on Subject-to and read JohnBoy’s response. Study all you can about this subject. A good education is the basis for good decisions.
Do you fill out a regular purchase contract for this with subject to clause? Since the seller is behind on the payments have you contacted the bank to pay the late fees or how did you work it out to avoid the bank foreclosing? It seems to me if you find a property that the bank is ready to foreclose on that the buyer would need to have some cash to make the mortgage current. After the bank backs off then you could do this no other money down using subject to. This is all guesswork on my part so I would appreciate you filling in the blanks. If you use quit claim deeds I would be interested in which situations they are best used.
Thanks Steve
Just to make sure I understand-to acquire the deed in this fashion, there must me a “subject to” contract, is that correct? Is there a way to get the deed without such a contract?
Thanks-DS
You can just have them sign the deed in front of a notary so that it can be recorded. No contracts are needed if there are no other agreements. But you usually do because you are putting out money to buy their equity and you want to protect yourself before you actually spend the money. Things like checking title, liens, judgements, IRS, etc. If you have ckecked everything you own the property when they sign. You record to protect your interests.