How to Sub2

[Dante Nava]

So, I've got a perfect opportunity for a Sub2 deal (the seller is totally on board), but I don't know what I need to do to make it happen. My local REIA said go talk to a lawyer, so I've got a few calls out.

Everything I've read reminds me of the South Park episode with the Underparts Gnomes:

Step 1: underpants

Step 2: ???

Step 3: profit

I'd really appreciate it if someone could let me know what to expect and/or what to look out for since the process details are rarely explained. Thanks in advance!

-Dante

[Jonathan Rexford]

Here is a little checklist that I did put together for what I use. Their are a number of ways to take these down. I am just giving you my way. I have been using it this way since 2001.

JR’S KEYS TO THE KINGDOM

BUYING HOMES “SUBJECT TOO”

1. Sign A Contract With The Seller Subject Too The Existing Mortgages.
2. Collect payment coupon and copy of mortgage and note if the seller has it. If seller doesn’t have a copy of it then request a copy of the note from lender.
3. Have The Seller Sign The Seller Property Disclosure Statement.
4. Have The Seller Sign The Seller’s Affidavit. (Same Name Affidavit) If They Use Initials For There Name.
5. Have Seller Sign A Power Of Attorney And Have Your Trustee “Trustee Authorization” Regarding Insurance And Taxes.
6. Seller Then Signs Seller Mortgage Disclosure Statement (Due On Sale Disclosure Notice).
7. Seller Signs Letter Appointing Management.
8. Seller Signs Management Contract. (Just Keep This In The File)
9. Seller Then Signs Letter To Lender “Notification Of Establishment Of Trust” Hold This Letter In The File.
10. Seller cancel insurance policy and establish a new policy as a landlord policy naming the trust, trustee and seller ATIMA
11. Have Seller Sign The “Change Of Address” Form From The Seller’s Mortgage Company Statement.
12. Now The Seller Creates The Land Trust, Which Will Own The Property (through attorney)
13. Seller Signs Appointment Of Trustee. (You Or Your Appointee)
14. Seller Signs Appointment Of Successor Trustee. (You Or Your Appointee)
15. Seller Signs “Declaration Of Trust And Land Trust Agreement Naming Seller As Beneficiary.
16. Have The Seller Sign The “Standard Warranty Deed” Before A Notary.
17. Seller Signs “Assignment Of Beneficial Interest And Quit Claim Of Land Trust” Assigning Their Beneficial Interest In The Trust To A Personal Property Trust You Create For This Purpose Or Any Other Entity That You Choose To.
18. Seller Sign The Authorization to Release and The “Estoppel Letter” This Is To Be Sent To The Mortgage Companies To Verify All Balances.
19. Before You Invest Any Money Paying A Seller Or Bringing A Loan Current, Always Get A Title Search From An Insured Title Researcher. Verify That The Sellers Are The Proper Parties And That No Undisclosed Liens Exist.
20. Record The “Standard Warranty Deed” Along With The “Affidavit Of Land Trust” As Soon As Possible.