Quit claim deeds, title insurance and the ‘due on sale’ clause…

[Javier Osuna]

Hello gang,

I would like hear what experienced investors (particularly experienced wholesalers) have to say about quit claim deeds.

It is my understanding that quit claim deeds provide a means of offering a motivated seller with an alternate solution in scenarios where is little to no equity.

As wholesaler, I could put the property under contract subject-to the existing mortgage and then turn around and assign that contract to an end-buyer.

My specific questions are:

1) Is there ANY way to avoid triggering the DUE ON SALE clause, or would working with the seller to put the property in a trust the only way to avoid the bank foreclosing on the property?

I know that the likelihood of the lender calling the note due is minimal, nevertheless it IS possible. Its my understanding some lenders actually audit their portfolios periodically to check for changes in the chain of title.

2) How can I avoid cancellation of the title insurance coverage policy when using a quit claim deed? Is there some workaround or legal loophole one can use to keep the policy from going null and void or can a new policy be taken out?

3) what happens at the end of the subject-to purchase term of say for example five years? Would I (or the end buyer I assign my contract to) have to sale the property in hopes that it has appreciated in value and pay off the note? This would of course cause for the property to drop off the original seller’s credit…

I’d appreciate any feedback you can give. thx. J