Who is responsible for back mortgage after paperwork is signed?

[Becca Pariser]

Looking for advice:
We just closed on our first sub-to deal as end buyers (woo hoo!). We are responsible for the mortgage as of January 1 - but it's come to our attention that they stopped paying it back In October 2024. So they are two months behind. 

In this case, who is responsible for the catch-up? We already paid them a pretty sizeable entry fee ($30k) to cover some of their equity and debt in another project.

[Matt Devincenzo]

Assuming it wasn't addressed in your PSA specifically then it likely should be them, but the reality is it is likely you. You have the most to lose now since you'd be out all of your investment if the FC goes ahead. I question how you got here though? No one pulled a payoff to confirm the balance or looked at the latest statements before closing? 

I'd look at the closing docs for something related to the pro-ration of expenses etc and see if you have anything there that could be a clause you point to for them to cover those payments. Was it included as a credit/debit on the HUD so it should have reduced your cash to close? But if they don't willingly make the payment your only option would be to sue, and they have the upper hand to let the lender know about the sale possibly triggering DOS. They were already headed to FC, so in a sense they have nothing to lose...