What exactly is "subject to"?!? - Posted by M. Jamal Green

Posted by Amy on March 29, 2001 at 14:19:11:

If TN doesn’t recognized land trusts (although I understand they use trusts for estate planning)is there anything special we need to do to take over a property subject to? The seller just wants out from underneath the note, no cash out of our pocket.
When we sell, what takes place? During closing the trust just titles it to the buyer? Is this a difficult process because of wary title companies? Does the original seller need to be involved in any way? (other than to pay off the mortgage)
What’s a worst case scenario? What if the seller goes bankrupt or the mortgage co. decides to call the loan due? Wouldn’t a mortgage change letter alert a lender to start thinking about calling it due?
We have a motivated seller we don’t want to lose. Thanks for your help.

What exactly is “subject to”?!? - Posted by M. Jamal Green

Posted by M. Jamal Green on March 28, 2001 at 22:10:51:

Since I’m a newbie (I still have similac dripping behind my ears), I’m trying to get a handle on the concept of “subject to” that I see talked about so often…

My understanding is that if you place an option to purchase a property, If you want to protect yourself from having to purchase the property if you cant find a buyer, you make the purchase agreement “subject to” or in laymen terms “Based On” certain criteria

For example (as I understand it) If I place a property under contract with a right to exercise my option in say 45 days, my intention to purchase is based on a thorough inspection and partners approval, the wording in the contract would say something like… purchase is subject to inspection and subject to partners approval…

Am I way off base?!?!?

I don’t mean to waste anyone’s time with a basic question.

Also, does anyone have a copy of a purchase agreement that they successfully used to purchase a property in word, text, or adobe format?

Thank you all!

Re: What exactly is “subject to”?!? - Posted by Terry (Houston)

Posted by Terry (Houston) on March 28, 2001 at 22:46:02:

A little bit of combining strategies here.

  1. A contract to look at is on Bronchicks site legalwiz.com

Subject to means you are taking it subject to the existing mortgage. You may give money to the seller to take over this position or you may just take it over. I like to just take it over.

Getting it for an Option just means that you have the option to buy it or sell it but do not have an obligation to purchase it. On a subject to deal once you get the deed put into a trust and file it with you as the beneficial interest you now own it.

Putting in contingency clauses, subject to inspection and written approval etc…, will help you get out of the contract if you need to. How the contract’s written determines how you have to buy it.

There is a lot more to a subject to but you can check the archives as well as Bronchicks Cash Cow, a great course on the subject.

Best of luck

Re: What exactly is “subject to”?!? - Posted by Jim

Posted by Jim on March 28, 2001 at 22:39:27:


The subject to that you are referring to is what they call a contingency. (Subject to buyer locating a sub tenant, or subject to buyer obtaining a loan etc.) Kind of like little reasons why you could back out of the deal if you needed to.

The definition of the subject to you are referring to is:

When transferring title to a property encumbered by a mortgage without paying off the debt or assuming the note, means that the buyer is taking title “subject to.”… Basically, you make the payments on the loan but it stays in the sellers name until you find a buyer who will assume it or pay it off with a new loan.

If you need to see what a good purchase and sale agreement contains, visit www.legalwiz.com and click on legal forms for all you need to get an idea of what you’re looking for.

Best of Success