"Subject To" protection

[Michael Garrison]

I have a property that is in pre forclosure status. I have the opportunity to pick it up "subject to". I have the option on my exit strategy to either hold it and rent it to pay the notes or do a "lease option" and attempt to sell that way OR just outright wholesale the property. It is 5 months in arrears in payments and they would need to be caught up immediately. Im certain taxes are that far behind as well unless escrowed. Insurance too. 

Im asking for opinions but what i really need is a contract that protects me from the seller reclaiming the property once the note, taxes and insurance is current. 

Please elaborate or point me to the correct source.

Thank You

Michael

[David Dachtera]

@Michael Garrison,

The document which protects you is this: BEFORE you put out any money on this property, the seller must deed the property to you, preferably a warranty deed with title insurance.

Why would they do that for you? Do they want to avoid foreclosure? Either they deed the property to you or they get foreclosed on (or find another "buyer").

Once you are the owner of record, you are protected from the seller.

What about "due on sale"? Experience has shown that this is almost never an issue. Only Bank of America is known to do that, perhaps one or two other huge institutional lenders.

If that bothers you, study up on "sandwich lease option". The seller retains title (no more "due on sale" issues), leases the property to you and gives you a purchase option at price you negotiate with them. Your option fee is the money to bring the PITI current. Your monthly lease payments are made to an escrow agent who disburses to the lender, the county, the insurance company and the owner, in that order. You also negotiate the option to sub-lease and put your own tenant in the property so you can get cash flow over and above what you pay to lease the property.

There ARE options. Just gotta study up on 'em.

David J Dachtera

"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."
- DJ Benedict