Do You Do Your Own Subject-To Closings? - Posted by JThompson

Posted by JThompson on June 27, 2001 at 09:48:47:

Thanks Pete.

I am going to definitely use the hold harmless to get my attorney, or another one if the situation warrants itself, to do the deal for me.

I sincerely appreciate the advice!


Do You Do Your Own Subject-To Closings? - Posted by JThompson

Posted by JThompson on June 26, 2001 at 16:30:50:

Seeking help from the veterans here…

…how many of you do your own closings for properties you buy subject to?

Reason I ask is that I have a property in which the owner is willing to sell his FHA financed home to me subject to the existing mortgage. He bought it about three years ago ($58,000 and would sell now for $70,000), has virtually no equity in it, but has a good interest rate (part of it is interest free through our state) on the loan and a payment of $321/mo (not including taxes and insurance - another $91/mo).

We agreed in principle for me to purchase the house with him making the payments for the month of July and August. Purchase agreement will be signed tomorrow.

Problem is, I can’t find an attorney comfortable with the DOS clause in the FHA loan to do the paperwork or the closing without ‘breaking the law’. The risk involved here is that the lender doesn’t like it and calls the loan, which they won’t do because the loan is current and will stay that way.

Help me out here gang. Do you do your own closings on subject to’s?

I’m new here (got one flip ready to close in two weeks as my only other deal to date). Suggestions are appreciated in advance.


Re: Do You Do Your Own Subject-To Closings? - Posted by TRandle

Posted by TRandle on June 26, 2001 at 17:43:28:

Tell the ignorant attorneys to look at line 203 of the HUD-1 Settlement Statement (which I assume is a standardized form throughout the country). Yes, purchasing Sub2 is so unethical, illegal, immoral, stupid, etc., etc. that HUD thought they would include a specific line on the closing statement.

Then, as Pete suggested, find a decent title company that can do it for you, or train them how once you learn. My suggestion would be to get professional, knowledgeable assistance until you are comfortable with the process.

We do our own docs, but still close at a title company since we usually purchase title policies. However, the title company is really only performing notary services.

Re: Do You Do Your Own Subject-To Closings? - Posted by Pete Julian

Posted by Pete Julian on June 26, 2001 at 17:24:57:


We always use a title company for all closings - “subject to” and others. When we do a “subject to” deal our title company requires the purchaser and the seller to sign a hold harmless statement exempting the title company and its agents from any liability. Below is the verbage from the statement:

This agreement is entered into by WE-STEAL-EM, LLC (buyer) and John and Mary Beercan (seller) for the benefit of ABC Title Agency, Inc. (agent) in order to induce ABC Title Agency, Inc. to complete processing and closing of the loan. Borrower and seller promise and agree to hold harmless the aforesaid agent from and against any and all liabilities, losses, damages, expenses, and charges, including but not limited to attorney’s fees and expenses as a result of this transaction. Buyer and seller are aware that this transaction is potentially in violation of the current mortgage due on sale provision of the closing of the property located at 1234 Main Street, Any City, Any State 99999.

Further the undersigned agree to hold agent harmless in regard to any payments due now or in the future of the above mentioned mortgage.

In witness whereof, the undersigned have caused this statement to be executed this 26th day June, 2001.

Your attorney may be more inclined to close a “subject to” deal if a statement like this was signed by the purchaser and seller. I hope this helps. Good luck!

Pete Julian

Re: Do You Do Your Own Subject-To Closings? - Posted by JThompson

Posted by JThompson on June 27, 2001 at 09:47:08:

Thanks for the advice!

You guys are a wonderful source of knowledge and information!