Subject-to sales - Posted by Tim

Posted by Randy on October 07, 2007 at 05:53:04:

Thats true thanks for the input,it was more so on the basis of what the seller would be willing to do and the other options,in either case record a memorandum of agreement and depending on the situation record an option agreement(If of course its a lease option agreement) but clouding the title with the memorandum should be good.

Subject-to sales - Posted by Tim

Posted by Tim on October 04, 2007 at 10:43:47:

How is it that taking deed to the property subject to the existing financing does not trigger the “due on sale” clause in most mortgages?

Re: Subject-to sales - Posted by Rich-CA

Posted by Rich-CA on October 07, 2007 at 11:58:53:

I does trigger the DOS, but the clause says the bank MAY call the loan due, not that it WILL. The last time I heard of a loan called due for a transfer of title was in the 70s (I think, I’m relying on memory here) when the lenders took it all the way to the US Supreme Court and ended up winning. This was followed by legislation. So there are circumstances when they WILL call loans due, its its usually when the interest rates are a LOT higher than the ones in the loan they want to call. We’re not even close yet, but like anything that could change.

Re: Subject-to sales - Posted by Randy

Posted by Randy on October 04, 2007 at 11:08:35:

It actually doesnt eliminate the due on sale clause,the bank can enforce it but,I or anyone that I know has not known this to happen as long as the payments are current,it wouldnt financially make sence for the banks to do this because they loose money,The bigger risk of course is if the bank found out about if you get behind on the payments and they have a title search done,even so if you got caught up on the payments the bank would most likely keep taking the payments so they dont foreclose,in general though Subject to’s are usually on a shorter term basis,that you refinance at a later date anyways maybe 2-3 years on average,If the seller doesnt like this than go with the lease option if nothing else or start out with a lease option with an agreed upon subject to after six months may be a good way to go,I welcome someone elses view on this area.

Re: Subject-to sales - Posted by Bill Jacobsen

Posted by Bill Jacobsen on October 06, 2007 at 11:27:06:

I, also, have not had a bank enforce the clause nor have any of my fellow investors. By the way, a lease/option can allow the due on sale clause to be enforced.