My question is about "subject to". I haven't done any of these at all yet, but I understand how they work. What happens if the seller at some other time goes into bankruptcy on a "subject to"property you took over payments on? Is there a way to protect your property from being included in their declaration?
The deed is still in the borrower's name, and you will lose what money you have paid. They must include everything in the bankruptcy. If you decide to tell the lender, you have a subject 2 that will give the lender more power to do a due on sale clause, and then you know what you need to do is get a u haul.
In a subject to - you own the property - you actually have the deed. If the seller declares BK, in theory, yes...they can include the property in their BK filing. This relieves them of the obligation to pay the debt (mortgage)...but as long as you're paying for the mortgage and the property is NOT in foreclosure (meaning, not behind on the mortgage and the seller did not receive a Summons to Foreclosure or Lis Pendens), then the BK should NOT really matter to you.
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