Seller financing with subject to

[Tom Manna]

Hi everyone,

I’m currently looking at a deal in Massachusetts. I’m trying to figure out if it’s possible to do seller financing with a subject to on the current mortgage?

About the deal

18 units with an asking price of $2 million

The seller currently owns $500k

She is willing to carry the note but can I do a subject to to the $500k she owes?

Any info or point in the right direction would be helpful

Thank you!

-Tom 

[Account Closed]

Originally posted by @Tom Manna:

Hi everyone,

I’m currently looking at a deal in Massachusetts. I’m trying to figure out if it’s possible to do seller financing with a subject to on the current mortgage?

About the deal

18 units with an asking price of $2 million

The seller currently owns $500k

She is willing to carry the note but can I do a subject to to the $500k she owes?

Any info or point in the right direction would be helpful

Thank you!

-Tom 

 Subject To implies that you are taking over the loan and making the payments. I doubt she is selling for $500k if the value is $2MM What you probably need is a Subject To for the underlying loan amount PLUS a second note for the remaining amount of whatever you negotiate. In the alternative you could do a Wrap for the entire negotiated amount. Yes, it is doable. Yes, you need an attorney, in my opinion. The one thing you need to know is that Subject To or a Wrap will probably violate the Due on Sale clause the bank has in the contract with the seller. Almost no banks are calling notes due on this issue right now, but they could in the future.That means you would have to come up with financing to pay off the entire loan. You would receive notice from the bank and have a couple of months to refinance or sell the property. If the seller is wiling, it can be done.