Selling Home on Sub-To

[Chris Allen]

Long story short, I am in a difficult situation with a property of mine and need to get rid of property. We have an offer for someone to purchase our property via Subject To. 

Anything I need to be aware of or make sure they do for my protection? This is what they said. 

This is what the buyer said.

1: We agree to sign a deed in lieu at closing. In the event we are more than 30 days late on payment the agreement becomes void. Seller retains full ownership. 

There is also a provision in the promissory note that states in the event of default, we must deliver the property back in the same or better condition from the time of purchase. 

2: We will deed the property back to the seller & execute a contract for deed. The terms remain the same, we still pay the monthly mortgage payment. The only difference is the seller remains on title until we have enough equity to refinance or sell.

3: Typically we don’t agree to balloons. The market may vary one way or the other & we don’t want to be stuck coming out of pocket on the backend as well.

If it was needed to get the deal done, the minimum balloon we could offer is 10-12 years.

[Chris Allen]

Quote from @Ken M.:

Quote from @Chris Allen:

Long story short, I am in a difficult situation with a property of mine and need to get rid of property. We have an offer for someone to purchase our property via Subject To. 

Anything I need to be aware of or make sure they do for my protection? This is what they said. 

This is what the buyer said.

1: We agree to sign a deed in lieu at closing. In the event we are more than 30 days late on payment the agreement becomes void. Seller retains full ownership. 

There is also a provision in the promissory note that states in the event of default, we must deliver the property back in the same or better condition from the time of purchase. 

2: We will deed the property back to the seller & execute a contract for deed. The terms remain the same, we still pay the monthly mortgage payment. The only difference is the seller remains on title until we have enough equity to refinance or sell.

3: Typically we don’t agree to balloons. The market may vary one way or the other & we don’t want to be stuck coming out of pocket on the backend as well.

If it was needed to get the deal done, the minimum balloon we could offer is 10-12 years.

.

Never SELL using "Subject To". I can explain why, because I buy Subject To. If you want more detailed advice, I can provide it.

You BEST option is to contact a bankruptcy attorney and find out your other options. That doesn't mean you have to file bankruptcy, but you do need to know there are better solutions than Subject To when in foreclosure.

If you sign a deed in lieu, that means you will no longer own the property and will probably never be able to buy it. It is no longer yours. Period. Doesn't matter what they promise. It's a dishonest promise.

If you are in foreclosure, it sounds like you are either there or headed that way,  what you are encountering is a "foreclosure scheme" they are illegal in most places and for good reason.

(I won't do them)

The buyer can be facing "equity skimming" as defined by the law:

Penalties of Equity Skimming

Equity Skimming is a type of Mortgage Fraud. The FBI’s Financial Crimes Unit investigates these matters for filing of charges on Equity Skimming violations. As a result of being federally charged with these crimes, you may face monetary fines, penalties, prison time and other consequences of Equity Skimming.

Equity Skimming and related penalties of sentencing are detailed in 12 United States Code USC Section 1715Z-19. These penalties include:

• Five years in prison
• Up to $500,000 in fines

Equity Skimming may also result in Conspiracy charges, specifically conspiracy to commit bank fraud and false statements to influence a financial institution. Penalties of these Federal charges may include:

• 30 years in prison
• Up to $1 million in fines

It's a Federal crime.

I'm not currently at foreclosure, but am recently out of state starting grad school, no income, and home needs repairs that I simply do not have the money to make. I can only come out of pocket to cover mortgage so long.