Got a deal. Need Subject-2 advice - Posted by Brian_wa

Posted by gerald(tx) on October 26, 2004 at 15:25:12:

The DOS is really a non-issue. In today’s market, the lenders don’t care who makes the payments, as long as the payments are made on time.

On the other hand, there’s no point in stirring up anything. Just quietly take your seller’s coupon book, write a change of address on the coupon, then start making the payments.

Go ahead and record the deed. There are no spies at the courthouse, so the lender will never investigate – unless you start getting late with the payments.

Got a deal. Need Subject-2 advice - Posted by Brian_wa

Posted by Brian_wa on October 23, 2004 at 01:14:11:

I have a property under contract. It’s a subject-2 deal. I live in Washington and plan to put this property in a trust using forms and instructions that I got from the course “the ABC’s of subject to” to secure the deal.

I, of course, will have these forms reviewed by an attorney. However, I have the following questions:

  1. Should I purchase Title insurance? If yes, should I purchase it with my name as the name on the policy or should I use my trustee’s name? What kind of title insurance should I buy if the answer is “yes”

  2. Do I need to involve an escrow company or Real Estate attorney for the closing? I’m paying 10k to get this deal and this is my first Sub2 deal so I want to make sure everything is being taken care of correctly.

  3. By putting the property in the trust, I won’t have to pay any excised/transfer tax (since the owner does not want to pay for anything as part of the deal). Is this a good idea? Would an attorney or escrow company ruin this idea if they were to handle the transaction?

  4. If I choose to handle the whole transaction by myself, would I have any title problem subsequently selling it to my end buyer, with them obtaining an actual loan?

  5. Is there anything else I should be concerned about?

Thanks a bunch

Re: Got a deal. Need Subject-2 advice - Posted by gerald(tx)

Posted by gerald(tx) on October 23, 2004 at 13:51:12:

My experience:

1- I don’t get title insurance when I buy, however I do perform a through title search to make sure there are no clouds or liens. Being a beginner, you can probably find some local investor to refer you to someone who will do it for around $50-75.

2- most investors don’t use an attorney or title company, however, since it’s your first deal and you are putting that much down, you would probably feel more comfortable with one. You might use the same one who reviews the documents.

3- They will probably go along with your desires since you are paying their fees

4- I look at it like this; since there is no new loan involved with your seller financing or L/O to your T/B, it’s okay to do a kitchen table closing and make a few errors, don’t worry about it.
However, when you sell, you will be using a title co. with attorney, purchasing title insurance, etc, so these guys will make sure everything is perfectly straight, including correcting any errors you may have made earlier.

5- just have a good plan on how you are going to handle the transfer of insurance if you plan on taking title in a trust name. Understand also that using a trust is your guru’s idea. Sells a lot of courses. But it’s not necessary, a lot of experienced investors don’t use them. You might want to do your first one in your own name before you jump into trusts.

Just my take,

Re: Got a deal. Need Subject-2 advice - Posted by Hunter

Posted by Hunter on October 26, 2004 at 14:48:03:

I’ve done a few flips but no sub 2’s yet. What is the mechanism that usually triggers the due on sale clause? Is it registering the deed? New insurance? I’m hoping to do a sub 2 this week and I was just going to have her quit claim it me and take over the payments while I market the house. I usually like to register the deed so the former owner can’t put any more leins on the property but would this raise a red flag for the bank?

Re: Got a deal. Need Subject-2 advice - Posted by Larry TX

Posted by"]Larry TX on October 26, 2004 at 15:44:29:

From what I have read and heard, because I have not done a sub2 yet, it is almost alway the insurance company who notifies the lender.

Registering the deed is usually safe and always a good idea.

It may be different where you are located, but in Texas a quit claim deed would not work. You would want a General Warrenty deed.

Like I say it may be different where you are but, I am curious as to why you would seek a quit claim deed when stronger deeds are available.