How do you wholesale a subject to without it blowing up in your face?

[Mike Schorah]

The seller would get the house back, even after we caught the seller up in arrears, paid closing costs, and put some cash in the seller’s pocket. Why does the seller care if we stop paying? He made $20,000 or $30,000.

What we do is sign a piece of paper called a performance deed. If we don’t perform or we’re thirty days behind, the seller automatically gets the deed back. And we’re not talking six months’ back payment. We’re only talking about thirty days. Other guys who do this force foreclosure, but we don’t want the seller to worry about that, so that’s why we do a performance deed through a title company. It’s held at title, signed by all parties. The seller wouldn’t have to fight us. The title company would just give the seller the house back.

[Tom Gimer]

Performance deeds cause title problems because they are by nature executed prior to default. That means no evaluation of LTV at time of default. If it could be argued that you violated the owner's right of redemption (robbing them of the equity they could otherwise realize through a private sale or foreclosure), you'll likely get sued and lose.