Seller Protection in a Sub2

[Joseph Ziolkowski]

Hi all! My sister called a local investor to purchase a townhome that she is making payments on but not living in. There is little equity, and she just wants to be rid of it, and it sounds like he wants to take over payments and leave her name on the mortgage. My question is this. To protect her interests and make sure she doesn't get stuck with a non-paying investor attached to the property, would it be out of line to make it a contingency of the sale that the investor signs a quitclaim deed, put in escrow at the title company, that says that if he doesn't make payments for one month, two months, etc the quitclaim will be released out of escrow and he automatically is off of the property? How might that best be done? Also, would it be out of line to ask him to put x months worth of payment (in line with the quitclaim agreement) in escrow as well, all to be released to her if he defaults? It's the only way I know of to protect her in this. Also in a sub2, is it common to stipulate in the contract a certain time that the property will be sold/refinanced etc to get her name off of it? Sorry so many questions, but I'm a wholesaler, and know little of the ins and outs of sub2's. Thanks for any wisdom you all can offer. :cool:

[Nick J.]

Joseph, if your sister doesn't feel comfortable selling sub2 to this guy then give me a call LOL!!!

I know, it's a shameless plug but really. She has to be ok with giving ownership, the quitclaim means nothing. The actual OWNERSHIP will be transferred simply b/c it is an actual SALE of the home. Quitclaims aren't transferred when you buy a house the traditional way and it's certainly no different here other than the existing mortgage stays in place, that's all.

If she's not comfortable with that then have her sell it Lease/Option, Contract for deed or whatever...........

I never put up payments in advance but will always offer to include in the P/S contract that I will deed the property back to the mortgagee if I fall more than 30 days late on the mortgage.

this way, the seller knows that I'm in it for the money and if I don't perform they can have the house back. Guess how many times I've had to do that?......NONE

anyways, hope that helps ,feel free to hit me up. I know a thing or two about a thing or two when it comes to Subs