First Sub2 deal in the works! Few questions.... - Posted by Charity

Posted by Mike G on April 17, 2003 at 20:57:26:

In FL, marriage creates an equitable interest. If that’s the case here, would probably either need both parties to sign or do the deal w/ one party and have the other QC his/her interest to the person you signed w/. Not Legal Advice

First Sub2 deal in the works! Few questions… - Posted by Charity

Posted by Charity on April 17, 2003 at 13:36:34:

OK, after MUCH studying and overanalyzing for months now, I think I have a good one. This guy came from a flyer I mail to the new expired listings everyday. He is a textbook Sub2 deal and I want to make sure I do this right.

House is worth at least $147,000 (just had appraisal last week). Comps in nhood are $149,900 to $191,000. He owes $133,000 and just wants someone to take over pmts. Divorce situation, but he is the only one on the deed. PITI pmts $1150. 2 payments behind, BUT says he CAN make those up and get current. Has agreed to also pay 3 additional payments once he vacates.

Totally OK with remaining on the loan and giving us the deed. Moving in with his brother for a year or more to get his credit straightened up so he can buy another house. Ready to just hand us the keys and leave at this point. House built 2001 and in new condition, great area. 7.5% interest rate.


  1. Even though the wife is not on the deed, is there anything I need to watch out for as far as his divorce proceedings? Meaning, what if the judge says he has to give her 50% of the profit on the sale of the house. That would not affect me would it since he really is getting nothing?

  2. What if he were to file bankruptcy in a year or something. How does that affect me if I am holding the deed at that point? Can the court reverse the sale that far from our transaction? My worry would be having a TB in the house and not being able to sell it for some reason.

  3. I don’t have my LLC set up yet, so on the paperwork and trust, do we just use the company name without LLC behind it OR do we use our personal names?

I am hoping to sign this one up Monday after Easter as he is ready to proceed!


Question 1 - Posted by rm

Posted by rm on April 18, 2003 at 13:02:22:

>1. Even though the wife is not on the deed, is there >anything I need to watch out for as far as his >divorce proceedings? Meaning, what if the judge says >he has to give her 50% of the profit on the sale of >the house. That would not affect me would it since he
>really is getting nothing?

Wait a minute. You’re a realtor, and you don’t know how marriage affects real estate ownership in your state?

If you’re in a dower rights state, has the wife signed a quit claim? Has it been recorded?

Updated info… - Posted by Charity

Posted by Charity on April 17, 2003 at 21:22:34:

In reference to the wife, he said “She signed off the deed.” We are understanding that to mean she quit claimed, but we will call him tomorrow to verify. He also said if there is anything she needs to sign, she is ok with it.

As for comps, I am a Realtor in the area. I was just saying what the RANGE for that particular subdivision is. The comps for the house would be $147,000-150,000 if I sold it the regular way. I figure on a LP, I can up that price for the 3 year option to around $160,000.

Anyone have advice on how to do this deal if I don’t yet have an LLC set up?


The comp spread… - Posted by Tim (CT)

Posted by Tim (CT) on April 17, 2003 at 16:07:02:

… was my first concern as well. IMHO, you can’t really compare a house selling at 140k to a house selling at 190k. Something has to be different about them to have that kind of a spread (i.e. neighborhood, cleanliness of home, repairs, etc.). Therefore, they wouldn’t be “like” sales.

A quick story about deed and ownership: I tried to do a sub-2 last year with a woman that owned a 2-family home. She lived in one unit and her friend lived in the other. Apparently, when they bought the house, they both went to look at it together. They tried to buy the house together and a broker told them that they’d get a better interest rate if only one of them was on the note. So, they did. Now only one woman was on both the note and the deed. The woman on the deed called me and we negotiated a sub-2 deal. My attorney told me that even though this 1 woman was the only one on the deed, the other had equittable title because both looked at the house together which forms a ‘constructive trust’. The 1 woman on the deed was acting in a fiduciary role to the other. She couldn’t just sell it on her own. She had to get sign off from the other first. One would do it the other wouldn’t. I said bye-bye.

Now, I don’t know if this would be an issue with you since they’re husband and wife. But, you may want to look into it before you get a year or 2 into it and then try and sell to your t/b. Even though the wife’s not on the deed, she may have equitable title via a constructive trust. Which means, she could cause trouble come the closing.

Just my $.02

Good luck

In addition to Steve’s comments - Posted by IB (NJ)

Posted by IB (NJ) on April 17, 2003 at 15:37:10:

Why is the range of your comps so far apart? That’s a $40k spread. You need to be more accurate as to what you think the house is worth.

Proceed with Caution…Esp if this is your 1st - Posted by Steve (Atl)

Posted by Steve (Atl) on April 17, 2003 at 14:41:19:

As far as BK, I think that you may be alright. As long as there was not a great deal of equity in the house, it is probably in their best interest not to contest it. However, it can become a grey area if it turns out there is a substantial amout of equity in the house.

As far as the divorce is concerned, it prbably cna turn ugly, whether it does or not, is a different ballgame. If he is the only on on the deed, then legally and logically, he has the authority to sell. I would make sure that all of your T’s are crossed, I’s are dotted and please tell me you are not handling this closing at the ‘kitchen table.’ This one begs to be done in your attorney’s / title company’s office.

Good Luck

Re: Updated info… - Posted by B.L.Renfrow

Posted by B.L.Renfrow on April 19, 2003 at 09:03:30:

As to what name to use on the documents, you can’t use the fictitious name of an entity that doesn’t yet exist. You mention you are using a trust, so why not just use an out-of-the-area trustee with a different last name? All the trust is really about is anonymity and protecting your privacy; as long as your personal name doesn’t appear on the recorded documents, you’ve accomplished that goal.

Brian (NY)