You are right if the sub2 transaction occurs and a new buyer who can qualify for the loan will simply refinance it then it’s good to go. If they can’t, which is one of the main benefits of doing sub2, then you’re right again they’re hosed.
Either way what exists now is a seller who isn’t motivated, in fact they’re motivated not to do the deal. They’re not looking at foreclosure and bad credit anymore, they’re looking at cold hard cash. That makes a sub2 look like torture than a life-saving event.
The deal probably could continue but if that special buyer isn’t found the seller could cause a lot of problems.
I have a sales agreement on a property, signed by the seller, and a notarized, recorded memo stating such. My agreement to seller states that I will purchase the home sub2 the existing financing, with total price being 400k. Seller was originally going to refi and I would make those payments, but before I could get the trust docs, etc. put together and signed, she spoke to outside influences that advised her not to do things that way. One of them was her realtor. The seller contacted me independently, therefore I believe she has to deal with the realtor issues.
The seller has been putting me off for weeks (closing was to be on or about the 1st of Jan) and I now find out there is an accepted offer on the property for a cash purchase of 395K. I believe with my recorded memo of purchase agreement that I have clouded the title. What recourse do I have, and can I prevent the closing and either get my sub2 deal or something in lieu of it? Could I work it out so I have to get compensated, or am I SOL?
This doesn’t sound like it has a promising future. If the seller wanted to retaliate they would just call the bank who would call the loan due on you.
If the seller isn’t willing to work with you on the sub2 deal then I’d walk away, there are too many things they can do to make yours or your buyer’s life miserable.
Re: agent accepted another offer! - Posted by John Merchant
Posted by John Merchant on February 05, 2004 at 06:24:47:
With your recorded Memo it probably won’t close until the issue is resolved.
But I’d recommend your having your lawyer look at this immediately before you get sued by Buyer & Seller on new contract. Your recording your memo could give them grounds for suing you for clouding the title and you need to address that right now.
Issue is raised in my mind whether YOUR deal is really a viable and enforceable K, and I’d get it to your lawyer now to read and interpret.
Elementary contract law says a contract requires Offer, Acceptance & Consideration. Does yours have these 3 elements?
Is there real consideration present in your deal? Did you pay seller something? Or promise to?
“This doesn’t sound like it has a promising future. If the seller wanted to retaliate they would just call the bank who would call the loan due on you.”
The bank can only call the loan due if there is breach of contract. An offer to purchase “subject to” doesn’t breach the contract, does it? I don’t see how it could, but I’m no expert. The moment the purchase is consummated they could certainly call the note due.
That may or may not be a deal breaker. If the buyer has bad credit or no assets then he could be well and truly hosed. In the case of a lot of people, we could just get a new loan (at possibly more favorable rates than orig) or just pay the note and get a new 1st mortgage at some convienent time. The “subject to” part of the deal is just convienence (why extend my assets if I don’t need to) and not a matter of overwhealming imporance.