My Meeting with RE Attorney re: Subject To

[Ryan Urban]

I'd appreciate your input on this.

I've been looking into the Subject To strategy, but I've been concerned with the legal and ethical issues involved. So I scheduled a meeting with a local RE attorney to discuss it. I had to contact several attorneys, as most of them said they wanted no part of Subject To deals.

I'll try to condense a 45-minute meeting into a few primary bullet points:

1. He agrees with virtually everything I've read about the Due on Sale clause, in that it's highly unlikely that a lender is going to (a) even recognize that someone else is paying the note and (b) go out of its way to act on it. However...

2. It is certainly possible that a lender would act, and if they do, it can involve more than just calling the loan due. "If you're willing to risk the small chance of being contacted by the District Attorney for fraud, give it a try. I've seen it happen." Moreover...

3. By far the bigger concern he has is action by the seller. He has seen several cases in which the seller claimed to be "duped" out of his equity by the Subject To buyer. He says that no contract will hold up in court, because all the seller has to claim is duress. And since the Subject To buyer is practicing a questionable purchasing strategy, he would not have much legal support.

The feeling I took away from this meeting is this: If you don't have much to lose, if you're willing to take on significant legal and financial risk, go for it.

Look, I know that many people are practicing Subject To purchasing regularly and with success. But even if I wanted to take all this risk on, I can't locate an attorney in my area who is willing to work on these deals. And that's quite a red flag, right there.

Before I toss the Subject To strategy out the window, I'd appreciate your thoughts.