Subject To Purchase ... How To Guide

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Subject To Purchase ... How To Guide

Sarah Jones
los angeles, CA · Member since 2009 · 223 posts · 4 votes

I'm in Los Angeles, CA trying to get a subject to done. I was wondering what are all the forms I need the seller to sign. I know i have to get a title company to check the title before I close but what are all the form I need to seller to sign because California may have different class.

-Standard Purchase and Sales Agreement (I couldnt find any that is subject to for California)
-Deed (Is there a link where I can go to get a print out of an blank deed so I can have the seller transfer that to me) They are ready to walk out of the house becauase they are behind on their payments.
-CYA letter (I have this)

is there anything else I need them to sign to get this done?
I don't think I need an agent becuase I am just taking over their payments and there isn't enough money to pay for an agent on this deal.. can I just use a title company instead?

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Michael Lauther
Investor · Hampton Bays, NY · Member since 2009 · 907 posts · 258 votes
14y

"Oh what a tangled web we weave when we first practice to deceive."

By the way yes Jon you of course are correct , Title companies do prepare the deed what I meant and should have been more specific they do not prepare most other types of legal documents although my title company has sent me samples of documents they have used from other investors in the past.

Sarah, your energy and drive and plain stubbornness in the face of criticism will probably net you success somewhere down the road, but honesty and your reputation are critical to long term success.

There is a reason many states require disclosure on a subject to transaction. Many unsophisticated property owners do not understand their liability and risk. Your seller apparently does understand and wants no part of it. You also say your seller is among a group you describe as friends. What will happen to your reputation when the seller feels cheated and you have to walk away from the property if everything falls apart and the lender calls the loan.

There is nothing illegal or immoral about subject to investments but care must be taken to protect all parties. Take the time you need to learn the process (as you are doing) but this deal is a non starter in my Humble opinion.

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  • Buck Tadlock
    Involved In Real Estate · Pasadena, TX · Member since 2011 · 41 posts · 1 vote
    14y

    Not intending on hijacking the thread but I'm all ears for learning this method!
    Lady that lives next to one of my rent houses wants out. I've read a book on sub2's/lease options and think this is a route I'd like to go with pursuing this property. She (seller) knows the risks: deed goes to me, mortgage stays in her name. If for some unforeseen reason I don't make the payments - it's on her. She is okay with this, even telling me how bad her credit is now days anyway (need to assure there are no other liens on the property that could blow up on me).
    What contract(s), addendums, etc would I use? (in TX by the way).
    -Thanks

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  • Brian P.
    Wholesaler · Salt Lake City, UT · Member since 2009 · 1k+ posts · 401 votes
    14y

    Good grief, I haven't found one lender in the current times that will call a due on sale clause if they can turn a non-performing loan back into a performing loan unless there is a tremendous amount of equity, of course that will change when property values increase and interest rates increase but that is not now. There may be a brain dead lender out there somewhere but they haven't shown up in my viewfinder for many years and why would they risk chancing a probable loss to them for some ego trip.

    My concern is you should update yourself on the many disclosures that are required in the sale of property in California. They are required even if there is no agent in the deal. And a standard CAR contract is fine, you just need the right clauses written in to cover a sub2 and the seller will feel better seeing a state form instead of some mickey mouse contract..

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