Subject to New Jersey

[Jamil Watts]

I'm a rookie investor looking to get my first property and am very interested in the subject to strategy. I am in contact with a title company who pretty much said I probably can't do it in new jersey and the due on sale clause would be triggered either from switching the insurance to my name or when paying taxes. I've heard online that even if it is triggered you could transfer the ownership back to the seller and do lease options indefinitely until the property is paid off. Does anyone in New jersey have experience with subject to that could give me some guidance?

[Ken M.]

Quote from @Jamil Watts:

I'm a rookie investor looking to get my first property and am very interested in the subject to strategy. I am in contact with a title company who pretty much said I probably can't do it in new jersey and the due on sale clause would be triggered either from switching the insurance to my name or when paying taxes. I've heard online that even if it is triggered you could transfer the ownership back to the seller and do lease options indefinitely until the property is paid off. Does anyone in New jersey have experience with subject to that could give me some guidance?

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I know you don't know this, so I'll be kind ;-)

Your comment: "I've heard online that even if it is triggered you could transfer the ownership back to the seller and do lease options indefinitely until the property is paid off."

Sorry, that is very bad information. You should ask your mentor the specific properties he did that to and see what happened. Specific addresses and specific occurrences.

Last year one such mentor got 10 Due on Sale notices, he tried that solution several times (he's the most popular mentor on youtube and instagram right now) but ended up having to find financing for 10 properties, very quickly. His word, in his video. I checked, I have the addresses.

Can you do that? No? Didn't think so. He is full of half truths.

Deeding back can be an unlawful action, cause damage to the seller's credit. You can try to deed it back, however the seller just sold it, why would he want the property back? If you deed it back, it is now his and you can't do a thing about it. The seller left town And you can't find him, now what do you do. You bought it without proper disclosures, now what?

Deeding it back is a "Due on Sale action" You get the loan called, (once a "due on sale is called" there is no requirement on the lender to call off the foreclosure", you lose property insurance, incur transfer fees from the county, truly mess up someone's (seller's)  IRS reporting.

Have you actually read a Due on Sale clause? I would suggest you do so. In the clause it says that "the intent to transfer ownership using "contract for deed" and lease options violate the Due on Sale. It's pretty inclusive.

Your mentor is very wrong and the legal entanglement falls on the person doing the SubTo, not the trainer. The authorities don't "give a pass" to a poorly trained investor on this one, one who says "I didn't know" or "I was told . . .". Too many people get hurt.

You mentor says his information is for "entertainment" purposes only. Why would he have to say that?

Word of wise advice to the newbie, ask an attorney in your area. But then, your mentor didn't tell you what questions to ask, now did he. Hmmm. That's a problem.

You can get your money back (and stay out of trouble) by contacting the Attorney General in your state. They are interested in you being repaid your money and not getting visited by them for other, more serious reasons.

Well, after all that, you will do what you will do.
I do wish you well though.