Non-Assumable Mortgage & Subject-To

1 Reply

Hello everyone,

I recently came across two properties being sold together by a real estate investor. I found out that the seller still had a mortgage on the properties, so I approached him about conducting a "subject-to" deal. After a day or so of deliberation, he informed me that according to the bank his loans were non-assumable. 

Now, I understand that there is a difference between "subject-to" and "assuming" a mortgage...And I also understand that certain mortgage contracts stipulate that the mortgage cannot be assumed. 

However, does the fact that a mortgage is considered "non-assumable" ALSO mean that it cannot be taken "subject-to"?

Thanks for your help!

Tyler

No, buying sub2 is an alternative to assuming. But, it does violate the due on sale clause, and you'll gets lots of opinions on whether that is a risk or not.  However, a sub2 does have risks to the seller, so since he's checking with his bank, or others, and he'll correctly be advised against a sub2, he likely won't agree.