Buying Property "Subject To"

In these times of political, economic and financial "change", real estate investors, brokers and even home buyers need to adapt to new lending guidelines and property values in order to maximize ROI, cash flow and/or "home for the dollar". One option is to purchase property "subject to" the existing mortgage; assuming the payments and perhaps additional consideration for the Seller or even Buyer. Buying a property in this manner presents an opportunity for the Buyer to get into a property with little or no money down and for the Seller to get out from under a property that is consuming him/her. However, there is also potential liability for the Buyer and the Seller. The Seller still is ultimately responsible for the loan. The Buyer may not have adequate cash reserves to weather vacancy, tax obligations or property maintenance issues. This all assumes that the loan is not "called" by the Lender; many loans have a "Due On Sale" clause.

That being said, in this economic climate many professionals have observed that as long as the payments are being made a bank is not about to foreclose on a property unless it is necessary. It is usually easier when the change in ownership invloves a corporate entity (LLC for example) and not the actual property, which is the case if it is owned personally. Conservative judgement dictates that transactions of this type require the assistance of legal counsel for both buyer and seller. I encourage you to send me your thoughts, experiences, commentary and questions.

Be well and wealthy!