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

9 Replies

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!

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?

@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.

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.

Originally posted by @Steve Vaughan :

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?

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