Subject To

The term Subject To is used to describe a certain method of buying real estate. Basically during the purchase the deed is transferred from the seller to the buyer, but the mortgage remains in the sellers name. You have ownership rights, but those rights are "subject to" the existing mortgages.

This sort of deal requires a very motivated seller who does not have a lot of equity in their property. There are any number of reasons that sellers might find themselves in this financial situation. It would be a good option for people who are facing foreclosure if they do not sell, as long as they are not already behind on their mortgage payments. You, as the buyer, structure the deal so that they sign the deed over to you, and you take over their mortgage payments.

There is much legality involved that I am just learning all of the details about, but there are also a lot of benefits. First of all, there are no mortgage qualifications, and no down payment or mortgage fees are required. It is easier to refinance the property once you own it than it is when you are first purchasing it.

This topic will require a lot more research before I would attempt it. I always thought that mortgages were structured to come due at the time of the sale of the property. There must be some legal instance where this sort of subject-to deal is allowed. It also seems like the sort of deal that can mostly be found on single-family houses, and not commercial properties. But it cannot hurt to ask for this kind of selling structure for any deal.