Assigning a Subject-To Contract? Is this Possible??

Question

Hi BP Nation!

So I have a house I have under contract for 36 months with the intention to do a Lease Option on. I have a buyer that wants the house for himself however, he wants to do a Sub-To. The house has a mortgage on it and needs work done. The buyer wants it as Subject-To since the mortgage is in place and my questions are: Do I need to have a Subject-To contract to assign to my buyer and if anyone knows of a lawyer in the Greater Philadelphia area that can help with this. Thanks in advance!

Jay Hinrichs · Answer

and a school tax and a few other gems.. PA is one of the highest cost states I have run into to transfer title..

Ayodeji Kuponiyi · Answer

@Doug Pretorius So I'll need an option agreement for the seller? And then sell my option to the buyer so they can exercise buying Sub 2? I'm not sure I understand, is there a way to reach out to you for more clarification?

Doug P. · Answer

@Ayodeji Kuponiyi No, as @Wayne Brooks said you can't sell on a sub2 when you only own an option. Buy an option from the seller which states that you can purchase the property subject to the existing liens. Then sell that option to your buyer. They then exercise the option and buy sub2 from the seller.

Ayodeji Kuponiyi · Answer

@Doug Pretorius So change my lease option agreement with the seller to an Option agreement & sell to buyer using Sub 2?

@Wayne Brooks You're saying buy via Subject 2?

Wayne Brooks · Answer

@Doug Pretorius Of course, your option would have to be via buying sub2.

Doug P. · Answer

@Ayodeji Kuponiyi You can get it under option (without a lease), sell the option, and the buyer can exercise by buying sub2. Let the buyer worry about paying a lawyer to do the sub2.

Wayne Brooks · Answer

Well, you can’t get it under a lease option and then sell it sub2, you don’t have title yet. As far as getting a sub2 contract, then assigning that contract, I don’t know that I’d want to be stuck in the middle if the buyer fails and law suits start flying. Sub2 is rarely a smart move for the seller.....too much risk and too little control/recourse, if the buyer doesn’t perform.

Ayodeji Kuponiyi · Answer

@Steve Vaughan So you'd acquired the property using an Option agreement? The property does need a lot of work. I have a buyer that would like to buy it Subject To so that he feels secures as he starts making improvements. I figured in order to save my interest, I should get a Sub To with the seller and assign to buyer.

Steve Vaughan · Answer

I've never gone under contract with a Lease Option. I run my title search and present the Option. Done. I'd get the Option whether you assign or not.

A sub2 shouldn't be any different than assigning a regular contract. Instead of buying fee simple, you're buying sub2 existing liens. I'd order an E&O from a title co to make sure all liens told are as stated.

Normally I'd suggest buying sub2 and selling again, but you have 4% excise tax in Philly, right? Buyer paid? That's crazy. Here we have 1.7% excise and I try to avoid that.

Get the Option, then assign the sub2 if you want, but I'd think about keeping it. Maybe too much work needed?

Assigning a Subject-To Contract? Is this Possible??

Assigning a Subject-To Contract? Is this Possible??

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