BiggerPockets

Hello everybody, I'm relatively new to real estate investing and have found a spec builder who is willing to let me take over his mortgage/note on the home with some cash flow for himself. Im from Texas and know lease option and subject to's are considered illegal. Can I use these options in New Mexico? Legal or not?
Also, if so how do i go about the contract? Where do I find one and which one do I use? I'm not gifted financially yet so it must not take very much money. Thanks for all your help.
Jesse

Im from Texas and know lease option and subject to's are considered illegal. Can I use these options in New Mexico? Legal or not?

Not illegal Jesse. In TX, they must be drawn up by an attorney and you or any RE agent/broker can not write up lease option contracts. This was done to "protect the consumer" as so many crooks were taking advantage of people. What it has done, is created a hardship for honest investors like ourselves.

I don't invest in New Mexico so don't know the laws and rules there, but I would ventire to guess you can do them, you just need to make sure you follow the proper protocol.

Perhaps some NM investors can chime in.

Call a bunch of title companies and ask them, they would know.

You might or probably will get a lot of title agents have no clue what your talking about so they'll be like, "whats your number and I'll get back to you"

if those words are mentioned, either hang up and call another title company or ask them if they can do WRAPS.

Wraps are very similar to Sub2s and there is a chance that a title company will understand that.

If they tell you NO you cannot do those transaction here in NM, ask them for the proof that you can't or refer you to their legal department to have them explain why it is not legal whether they call it a Wrap or Sub2

You could also contact the Attorney Generals office, but your not going to get any straight answers there unless you can find an article or press release relating to Subject to's or 'creative acquisitions in real estate' detailing certain laws that they will most certainly cite in those press releases/articles.

What ever you do, do not go to the department of Real Estate or any other agency that is obviously funded and structured for Realtors b/c they will tell you anything outside a standard typical transaction involving an Agent is illegal.

Hope that helps

Originally posted by nationwidepi

If they tell you NO you cannot do those transaction here in NM

then the translation to that is No THEY can not do that there, but YOU can. :roll:

good point, and yes that's exactly right!!!

Ok, talked to quite a few title companies from all over the state of New Mexico and it turns out wraps/subject 2s are not illegal at all. As a matter of fact almost every title company I talked to was more than willing to walk me through the process step by step. Unfortunately, all of them also required that the new buyer pay for a seperate insurance policy on the home. Whether or not this was there policy or state law is something that they all had a hard time answering. Did some research online and couldn't find the answer as to whether or not this new insurance policy was state law.

Good point Nick. No offense taken, HUD1 line 203 is for existing loans taken subject 2 . Getting another policy on the home would not only save me a little worry, but also protect me from a multitude of situations that could come up.

Originally posted by Anthony Sulecki

recording a deed is not illegal. that what a classic "sub2" is. you are taking the house, by a transfer of deed.

there is no reason to even contact anyone about this. there are simply no laws written anywhere, that say you cannot do this.

People like to think that "sub2" is a concept in itself. Its not. Its often taught as such, but its nothing more than you recording the deed. What you plan to do on the backend is what matters. You can LO, wholesale it, retail it, seller finance, whatever fits.

This is not entirely correct. Yes, you CAN do sub2 anywhere in the US, but SOME states have passed laws with special requirements you must meet. Some states require the paper work to be drawn up by an attorney others require specialized disclosures others like NC have even more creative restrictions.

Can you record a deed without meeting these requirements? Probably. However, if you fail to meet ALL of the requirements in your area you can face some rather severe consequences after the fact.

If I'm not mistaken then wrap-around provisions in someone's state regulate sub2s. Is this correct?