SubTo Deal - Lien Question

[Michael DeCicco]

In a SubTo deal, as the seller, can someone walk me through the lien part? Placing a lien on the property to guarantee payment from the buyer, what if the buyer wants to sell/refi? Does the buyer always have to pay off the existing loan in full before selling or refi? Is there a way around this or a legal agreement you'd suggest? Thanks

[Account Closed]

Quote from @Tom Gimer:

@Account Closed You can do a subject to with a subordinate lien. Just did one where the seller took its equity in the form of a balloon deed of trust. That will get paid when the buyer refis next year.

@Tom Gimer: Yes, I know. Thank you.

I understand and on that one you have a date certain for a balloon. Most Sub Tos don't have any kind of balloon. 

What I am talking about is anything that gives the seller the false impression he is somehow protected. The OP asked about a lien to guarantee payment. I don't think he realizes what a lien is in this case or how it would apply. 

If he had said balloon, or DOT, my answer might have been different. A balloon implies he has some kind of equity he is willing to wait for.

Since many people read these posts, it's important, in my opinion, to make sure they understand they have no real control after they sell Sub To without taking on the expense of legal counsel.

All I do are Subject Tos, Wraps, Lease Options, Seller financing and I often have sellers come back in a year or two and want to be off their mortgage. Even though it builds their credit and always gets paid on time. 

My paying their mortagage payment has dramatically improved their credit score. They want to buy a house again. I have to explain to them, again, that is not what we agreed to.

We agree in writing, I record the conversation, we text each other (this is not a 10 minute process, multiple conversations over the course of time)

they sign disclosures, it's done in escrow, no hanky panky, yet still they are upset that they "didn't understand" what they were doing. (Nonsense of course, I was their "hero" for bailing them out of a bad situation, but that no longer matters to them.) 

I've had to provide proof to attorneys over the years. Normally that takes care of things.

But, One case I was in went to the 9th Dist Court of Appeals, but that's another story. That's how I know what I speak of. ;-)

Didn't mean to get into a rant, but there are a lot of half trained wannabes trying to do Subject To and they don't tell the seller of the seller's risks. The easy part is getting the signature. Over Disclose, Over Disclose, Over Disclose.