'Subject to' method - Posted by BennyC

Posted by Rob FL on June 13, 2001 at 10:21:54:

Personally I have never bought on a lease option. I’ve always had the seller sell “subject to.” To me this is much cleaner and easier.

Just make sure you have an exit strategy with the property before you make a commitment to buy it.

‘Subject to’ method - Posted by BennyC

Posted by BennyC on June 12, 2001 at 23:12:42:

Dear All,

Can anyone give me a brief description of the ‘subject to’ method? and when should i use it? Any advantage compare to lease options?

thanks a lot for your help.


Re: ‘Subject to’ method - Posted by Rob FL

Posted by Rob FL on June 13, 2001 at 08:28:47:

In a nutshell, “subject to” means the seller deeds the property to the buyer and the buyer simply takes over the mortgage payments. The current mortgage is not paid off or assumed by the buyer. The property’s title is taken “subject to” the lien of the mortgage. I recommend using this procedure whenever the seller will allow it and you can make a profit.

The advantages over lease options are that you have ownership of the property. You have the title to the property not just an agreement for the seller to eventually give you the deed. Someone once said “possession is 9/10 of the law.”

The disadvantage that my friend Jim Piper points out is that because you now own the property you have more liability. This includes the liability that property values may decline.

Re: ‘Subject to’ method - Posted by BennyC

Posted by BennyC on June 13, 2001 at 09:58:55:


Thanks very much for your explaination!

I am new in this, regarding the liability issue, so will it be safer to do lease-option in the beginning in case I make some mistake in the process?

and do you know any good sources (books or course etc.) that I can learn the ‘subject to’ more in depth?

I am new, I am thinking of either doing ‘wholesale’ or ‘lease-option’. I am in New York, the house prices here are very high. For wholesale, I don’t know whether I should go for it because these days they are talking about the ‘seasoning’ issue, and I am afraid I can flip the house within a year. It seems that ‘lease-option’ is a better way for me to start, because I can deal with better neighborhood, and I don’t have to estimate repair cost etc, and the price of the house is really not an issue. But is there anything that I should be very careful when I am doing lease-options? Any traps, pitfalls etc?

Thanks very much for your time and help!

Best Regards,

Re: ‘Subject to’ method - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on June 16, 2001 at 23:33:35:


Check out these courses that are sold here through this web site.



There’s also another course that’s advertised here. Click your refresh or reload button until the banner at the top of this page displays “The ABC’s of ‘Subject To’”.

In your post, you wrote, “… the price of the house is really not an issue”, in reference to lease/options. Benny, the price is almost ALWAYS an issue. It may be of less concern in certain types of transactions, but price is almost ALWAYS one element of the deal that must be taken into consideration. While it’s true that the impact of ‘price’ can be mitigated by other elements of the deal, that doesn’t mean that you can simply ignore ‘price’. I say “almost ALWAYS” because about the only time you can totally ignore the issue of ‘price’ is when the ‘terms’ are so ridiculously skewed that ‘price’ becomes inconsequential. Here’s an extreme example. I’d gladly agree to a purchase price of $1,000,000 for a property with a FMV of only $100K if the seller would agree to carry the financing at my terms of, let’s say, $100 dollars per month, zero interest, until paid. Now obviously this is pretty outlandish. In the usual course of creative real estate transactions, including lease/options, you’ll get into serious trouble if you start taking a cavalier attitude regarding ANY element of the deal.

Hope this helps.

Best of Success!!

Jim Kennedy,
Houston, TX