buying "subject to" in Illinois... help me

[Shane McCarty]

Hey guys,

I live in Atlanta, but have my first subject to deal lined up in Peoria, IL. I've called a couple title companies there and they are not familiar with the process and one said that the practice CANNOT be done in the state of IL. I could use some help from investors in IL... how do you set up a sub to there?? Do you use a title company? Any guidance is much appreciated!

[Stanley Yeldell]

Shane, buying "subject to" in Illinois is possible, but the state has stricter regulations around real estate transactions. Here are some key things to consider:

1. Find a Sub-To Friendly Title Company or Attorney – Illinois is an attorney-close state, meaning real estate closings are typically handled by attorneys, not title companies. You’ll need a real estate attorney experienced in creative financing.

2. Land Trusts for Extra Protection – Many investors in Illinois use a land trust to hold title when doing subject-to deals. This can help avoid triggering the due-on-sale clause.

3. Disclosures & Compliance – Illinois has strong consumer protection laws. Make sure to provide clear disclosures to the seller about the risks involved, especially regarding the existing mortgage staying in their name.

4. Insurance Considerations – You’ll need to work with an insurance agent who understands sub-to deals, as the lender might require a policy that keeps the seller as the named insured.

5. Due-On-Sale Clause – While banks rarely call loans due, it’s still a possibility. Structuring the deal properly (like through a land trust) can reduce this risk.

Your best bet is to connect with an Illinois investor who has successfully done sub-to deals or find a local real estate attorney who specializes in creative finance. Would you like some referrals or help finding an attorney in Peoria?