Lender's Occupancy Certification Letter

Investor · Irvine, CA · Member since 2009 · 261 posts · 183 votes

We have a rented property in Texas purchased Sub2, with the loan remaining under the original sellers' names.

The mortgage company sent the sellers an Occupancy Certification letter asking the borrower to confirm within 30 days that the home is still their primary residence.

Has anyone received a letter like this before, and how should this issue be handled?

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Diana KhanPro Member

Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 643 posts · 227 votes

Quote from @Dani Beit-Or:

We have a rented property in Texas purchased Sub2, with the loan remaining under the original sellers' names.

The mortgage company sent the sellers an Occupancy Certification letter asking the borrower to confirm within 30 days that the home is still their primary residence.

Has anyone received a letter like this before, and how should this issue be handled?

@Dani Beit-Or, I wouldn't ignore that letter, and I definitely wouldn't have the sellers confirm that the property is their primary residence if that isn't true. Since the property was purchased subject to the existing mortgage, I'd have a Texas real estate attorney review the letter, the loan documents, and the purchase agreement before anyone responds. There could also be a due on sale issue depending on the loan terms.

I'm a real estate attorney and investor based in Maryland, and I work with clients on contracts and property transactions. I've seen how important it is to understand the terms of an agreement before taking the next step, especially when the original borrower is still responsible for the loan.

I appreciate you bringing this up, @Dani Beit-Or. It's an important reminder that subject to transactions can carry risks even after closing. I hope you're able to get this sorted out, and I'm happy to stay connected!

[email protected]240-266-0291

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Diana KhanPro Member
Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 643 posts · 227 votes
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Quote from @Dani Beit-Or:
We have a rented property in Texas purchased Sub2, with the loan remaining under the original sellers' names.
The mortgage company sent the sellers an Occupancy Certification letter asking the borrower to confirm within 30 days that the home is still their primary residence.
Has anyone received a letter like this before, and how should this issue be handled?
@Dani Beit-Or, I wouldn't ignore that letter, and I definitely wouldn't have the sellers confirm that the property is their primary residence if that isn't true. Since the property was purchased subject to the existing mortgage, I'd have a Texas real estate attorney review the letter, the loan documents, and the purchase agreement before anyone responds. There could also be a due on sale issue depending on the loan terms.
I'm a real estate attorney and investor based in Maryland, and I work with clients on contracts and property transactions. I've seen how important it is to understand the terms of an agreement before taking the next step, especially when the original borrower is still responsible for the loan.
I appreciate you bringing this up, @Dani Beit-Or. It's an important reminder that subject to transactions can carry risks even after closing. I hope you're able to get this sorted out, and I'm happy to stay connected!
[email protected]240-266-0291
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- Dani Beit-Or
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  Investor · Irvine, CA · Member since 2009 · 261 posts · 183 votes
  6d
  TY for the answer!
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
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You can ignore the letter but this property is on their radar and issue probably not going away. I would make sure you provide the borrower the letter and let them decide if they want to complete it or not.
No better way to get sued by knowing you got it and not doing anything with it
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Chris ColtonPro Member
Investor · San Antonio, TX · Member since 2026 · 10 posts · 2 votes
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Dani, I wouldn’t ignore that letter, and I wouldn’t have the sellers sign something that isn’t true. That’s the part that can create real trouble. Before anyone responds, I’d have a Texas real estate attorney look at the letter, the loan documents, and the purchase agreement together, and check what the due-on-sale language actually says. In the meantime, keep the payments current and documented, and keep a clear paper trail on who is paying what. The letter itself is a good reminder that subject-to doesn’t end at closing — the loan is still in the sellers’ names, so you have to plan for the lender noticing.
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