Closing a "Subject To" Deal

12 Replies

Do you have to close a "Subject To" deal with a Title Company?  Or can this be done with just a Notary and Witnesses (example: at a Bank)?

Closing at a bank will most certainly end up with the entire loan being called due immediately. I vote that you stay away from a bank!!

Thanks Phillip!

@Carl Randal  

Some investors in Texas (and I realize you're not in Texas) will "close" at a notary but typically do so only in very unique (urgent) circumstances. Are you buying or selling sub-to?  Why are you considering this option? 

@Guy Gimenez  

Thanks for the response Guy, just wondering from a "costs" perspective.  Not withstanding the services provided by a title company, closing at a kitchen table can be a lot less expensive than a title company.

Pretty easy to close it at the kitchen table, all you really need is a deed signed for ownership, then a POA to deal with the lender, plus a CYA letter for your file. I've done both, but prefer to use an attorney and do a formal closing, it solidifies in the sellers mind that they have actually transfered ownership.

@Carl Randal  

You can save money by performing your own heart surgery too but I don't recommend it.  I will tell you in all honesty that if a deal is only a deal if you don't include a title insurance and typical closing fees, then it was never a deal to begin with. Don't step over a dollar to save a dime Carl as it will come back to bite in a big way at some point. I will not buy without title insurance under any circumstances. 

With that said, if I am comfortable risking a small amount of cash upfront for a truly great deal to keep it from foreclosure, etc. and I don't have time to get a title search completed, I will usually just get the seller to sign a pocket deed (along with a couple other docs and loan info) to protect my interests. I won't file the deed , I just keep it for protection until I can get the deal closed at a title company.  

@Guy Gimenez  @Darrell Shepherd @Mark Brogan  

Thanks, I like all of your collective reasoning.  Closing with an Attorney or Title Company is the best policy.

The seller in my case is willing to do a short-term Sub2 (for me to fix and flip to retail), but she owes about $18k to bring the loan current, and foreclosure auction is set for June. I want to help her out of the situation, make a little money for myself (profit about $15-20k), but don't want to plunk down the $20k cash at closing (the title company that I use for Sub2 will want me to pay that at closing).

If I have her sign and notarize the Sub2 contract, a POA, a Due on Sale Acknowledgement, and a "pocket deed" - am I covered? Then it's just a race against the clock to make sure I get it rehabbed and sold before June??

Where would I get a "pocket deed" document?


Don't try that in Calif.  CC1695 will be painful.

Is there a special contract to do a "subject to"?  i live in Texas and this will be my first subject to on taking on a loan or deed.  i  want the owner and myself on doing it right the first time around. thanks for any help

Hello, is there a contract for the state of Ohio? What are all the documents that need be signed?

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