This has to do with basic contract law, bi-lateral and uni-lateral contracts, a financing agreement, any agreement where a seller extends credit is a uni-lateral contract which may not be assigned by an obligated party.

It's the difference between bilateral and unilateral contracts.Now, if you were to spend just a few days (3, 4 maybe 5) learning real estate, you'll save a lot of time and blood dripping from my finger tips repeating these basic issues LOL :)Take an option, get out of the way between the buyer and seller and obtain a release fee to release your encumbrance!

A sale contract is a bilateral contract, both parties perform, one promises to sell, the other to buy.A unilateral contract may NOT be assigned without out the CONSENT of non-serveant, the party who does not perform.

In a Sub-To, the underlying mortgage remains, it is an obligation between the lender and that borrower, it is a bi-lateral contract.

Bilateral contract

The way it was explained to me by a judge is that a lease is a Bi-Lateral agreement between landlord and tenant.If the tenant does not perform per the lease agreement say 'Rent is due on the first and if not in by the grace period of 11:59 of the 3rd, then on the 4th it is late and fees apply' (per the lease agreement that both parties signed.)When the tenant does not pay and if you do not charge late fees that were in the agreement and start the eviction proceedings that are in the contract, then the owner is actually the first one in breach of contract not the tenant, and you are potentially setting a precedent for not only this tenant but for all your properties due to potential Fair Housing and Discrimination Laws.So the point that the Judge was getting across was that if you put it in the contract you better be willing to enforce and back it up.

But, you have another issue, a note is a bi-lateral contract, they may not be assigned or assumed without the lender's consent as they always have the right not to extend credit.Thinking you're going for an interest spread gets more complicated than folks think, your amortizations and contributions to principal will not match, unless the two contracts are made together.

Yep, after you learn the principles of real estate, you know, the stuff that doesn't promise you'll make a million by Christmas, just the basics, like what real estate is, why it is unique, what rights of ownership there are, types of deeds, title, what title insurance is, how property is valued, what liens and encumbrances are, how to read a legal description, what bilateral and unilateral contracts are, what is necessary in a contract, what a leasehold interest is, how settlements are accomplished and the laws surrounding transactions. 

They are bilateral. 

Here it is for you, I thought it would be interesting to hear what you first thought was, honestly:Q: An Option once exercised is considered:1: Unilateral executed2: Bilateral executory3: Unilateral executory4: Bilateral executedThere is 1 single answer so none of that 'depends' stuff.