All Forum Posts by: Caleb Christopher

For the record, subto is not illegal. It's a defined default on the mortgage or deed of trust, with a defined remedy (acceleration / due-on-sale). The lender is not obligated to call due on sale, and they often don't if the mortgage is being paid.

I call BS. Subto is not fraud. Everyone say it 3 times out loud.

If you're obtaining funding from a lender and provide false information or withhold material information, yes, that would be fraudulent, but transferring after closing without notifying them is not fraud. It's a defined default within the mortgage document, and it has a defined remedy. The lender is not obligated to exercise that remedy, and often they don't.

Come on now, you make important points overall, but this one needs to be redacted because it's just untrue.

I started a company to put up some guardrails on these types of deals. I did my first one on my own for lack of good guidance/resources, and it was a nightmare. We got it done, but I resolved from that point that someone needed to be a lighthouse to keep other ships from crashing on the rocks!

I now run 50+ subto, wrap, and seller finance deals per month for buyers/sellers/agents and we're constantly correcting errors and misunderstandings. 

My thoughts: Yeah it's exciting and great to expand your horizons with creative finance, but you also need an experienced guide, whether that's a JV partner or paid consultant. Title companies and closing attorneys can not be trusted to understand the full implications, as their focus is to close the file... After COE, it's your problem, not theirs. 

@Chris Seveney he acknowledges the low/no cash flow, but he's after a low-entry acquisition with debt paydown and equity-building. It's a longer play where the cash-on-cash return is crap, but the true return is there. Through depreciation, other income taxes are offset, through debt paydown and appreciation, he's going to gain $thousands per year in equity.

Subjectively, it may appear not to be a deal, but if the buyer understands these factors and wants the property, an entry fee under $10K sounds like a deal. "Buy real estate and wait" is the big-picture game. He'll be happy he did this deal 2 years from now, and would be kicking himself for dodging it because it didn't cash flow immediately.

@Chris Seveney I contend that an attorney letter will do quite a bit in this scenario. The lender should provide a payoff, but if they don't, I suppose all the better for the property owner, because the lien can be removed by judgment without payment.

Other than the payoff amount, the bank doesn't have to disclose account information. I get what you're going for, but my point is that if someone has a lien against a property you own, and they refuse to give you the information required to release that lien, it's not a stretch to see that you could just file a quiet title claim. If they continue to refuse to provide the information, the court action will cause them to cough it up, or their lien will get wiped out through a successful quiet title action.

To have a lien released through a quiet title action:

1. File a Lawsuit: You, as the property owner, file a lawsuit against the lienholder and any other parties with claims on the property's title.
2. Notification: All relevant parties are notified of the lawsuit, including the lienholder.
3. Legal Proceedings: The court will review the case and assess the validity of the lien and other claims on the property. If the lienholder cannot prove a legitimate interest in the property, the court may rule in your favor.
4. Quiet Title Judgment: If successful, the court issues a quiet title judgment, which effectively removes the cloud on the property's title, including the lien.
5. Recording: The quiet title judgment is recorded in public records, officially clearing the title of any conflicting claims, including the lien.

I use OnePoint Lending as the servicer for our seller finance and wraparound deals (www.onepointlending.com). I've worked with several loan servicers, and no matter who you use, it's not fun setting it up, but I've had easier success communicating with OnePoint.

They have a login portal to track payments etc, like you mentioned.

1) I'm not a fan of over-leveraged purchases. I agree someone with no cash should still not do a deal, because they can't handle any emergency expenses, or payments when renters don't pay. I weathered the Covid storm out of pocket on my rentals when renters didn't pay, and that came from savings!

2) You can buy with low/no cash either responsibly or irresponsibly. (position of strength or weakness). For example, it may be prudent to buy with low cash at COE if you retain the cash as reserves. The same purchase with more cash upfront but which also depletes your emergency fund would be not-so-good... It's hard to classify a whole diverse set of situations on a 2-ended slider scale of good vs bad, lol, but the context is helpful.

Sometimes, when doing certain types of subto deals, we cannot obtain title insurance. We often close anyway, if a comprehensive review of title history comes back clean. The buyers have to sign a "waiver of title insurance" to acknowledge the risk. 

I LITERALLY just closed 2 in Oklahoma this week without title insurance of any kind (FHA mortgages that title companies wouldn't close and insure).

That said, you may also be able to buy on seller finance with a Contract for Deed or Land Contract and so long as title doesn't legally transfer from the seller to the buyer, that seller's title insurance remains valid on the property... There are plenty of other considerations to factor before simply opting for that route though. It's a whole contextual discussion that needs to factor the seller and buyers' separate needs and desired outcomes, state law, etc.

@Erik Caseres did you get an answer? I've done several subtos in Montana. It's not my favorite state to work in, but it can definitely be done. Depending on the loan type, you may have trouble getting title insurance, but we've successfully closed several.

I can't vouch for any particular title company, as we normally have to coach them through the whole process.

If you have one and need help, tag me.

@Alex Byder did you find what you were looking for? I JV or consult on deals and bring the paperwork with me as part of my value in the deal.

Good Googling and/or facebook group attendance can net you what you're looking for, but they tend to be janky, abandoned stuff. I do 50+ creative deals per month, so we're on point.

IN TEXAS THOUGH, you can use the TREC contract and addendums to write your terms in detail.

Some closing attorneys that do creative deals: Cheshker Law, Horne and Associates, Tipton Law, THE Title Company, My Title Company, and quite a few others. I've worked with each of these listed here.

Tell them Caleb Christopher from Creative TC sent you.