“Subject To”- What is it?
When Top Notch Realty LLC buys property “subject to,” we are purchasing it subject to the existing financing. Put simply, this means that the loan(s) and any other liens or encumbrances already on the property stay there without any formal assumption on our part. The owner deeds the property to us, and Top Notch Realty LLC takes the payment book or online payment information and starts sending in the payments just as the former owner did.
Is it Legal?
NO! Simply refer to line 203 on the standard HUD-1 form where it says “Existing Loans Taken Subject To” Don’t let the uninitiated lawyers and Real Estate agents convince you that there is anything illegal about selling your home subject to the existing financing.
Why Does It Work?
There are many reasons as there are houses, Top Notch Realty LLC has taken ownership of multiple homes from sellers in a wide variety of situations. I list a few a situations below as example;
Downsizing
- Tired of Landlording
- Relocating For Work
- Divorce
- Death In The Family
- Tired Of Making Repairs
- Foreclosure
- Tired of Making Payments
- Behind On Payments
The “Due on Sale” Clause
There is absolutely NOTHING illegal, immoral or unethical about selling your home “subject to,” The due on sale clause gives banks the right, AT THEIR OPTION, to call the loan due upon transfer of the title or beneficial interests in the property. We have never had a bank exercise their option to and call a loan due, specifically a mortgage loan that is being paid consistently on time each month. First, the Bank doesn’t have spies at the courthouse looking for title changes on properties. Chances of them even finding out about a transfer on their own is very, very limited. Second, today’s interests rates are so low. As long as the lender is receiving their payments on time, they wont interrupt the cash flow by calling the loan due. Banks have nothing to gain by recouping their investment property to just make another loan at the same or similar interest rate. Third, if the bank calls a loan due, they incur foreclosure costs.