Purchasing Subject to

[Michael Moikeha]

I have a property that I will be purchasing sub to. The owners are great people and they understand the risk pertaining to the due on sale clause and know that if we miss payments it will hurt them.

I went to Escrow today to start the closing process and I was told that they can not do a subject to, but it would be considered an assumption and we would have to speak with the lenders to get approval for that. Obviously this is not what I want to do, as that defeats the purpose of purchasing sub to.

Before I start calling around to other escrow offices, I wanted some advice. 

Is "Subject To" just a REI term? Is there a proper documentation process/legal methodology for closing in escrow that goes along with this?

We were going to bring in a Real Estate Attorney for the final steps before closing to ensure that everyone is safe and happy, but does this have to be structured through an Attorney first?

Here are the details I am working with so if you try and describe the steps to me, we are on the same page.

Purchase Price - $280,000

Mortgage Owed - $250,000

Payment to Seller - $30,000 ($10,000 at time of purchase, and $5,000 over the next 4 years)

[Brian Gibbons]

Hi @Michael Moikeha 

I would find an investor that has successfully done a sub2 and has gone through a real estate attorney where you live.  

Call all the title companies and all the REIAs for a real estate attorney that has been representing real estate investors.

My paperwork for a sub2 include

• The Purchase and Sale Agreement 
• Seller's Due-On-Sale Acknowledgement 
• The Quit Claim Deed to Trustee 
• Get an Authorization to Release Mortgage Information 
• Get A Limited Power Of Attorney 
• Updating the Insurance Coverage 
• Controlling the Escrow Account If The Mortgage Company Calls the Loan Due 
• Addendum to Purchase and Sale Agreement 
• Quit Claim Deed to Trustee Authorization to Release Mortgage Information 
• Limited Power Of Attorney Regarding Real Estate 
• Insurance Letter (Adding Additionally Insured) 
• Escrow Letter 
• Letter to Mortgage Company