Subject To / Sub-2 / Lease Options - Legal in California?

6 Replies


I am looking to start a Subject to / Lease Option business in California. I was advised by an attorney to look into the "Foreclosure Consultant Laws" which may cover these type of transactions.

Is anyone doing Subject to / Lease Option transactions now in California and if so what do you know about the "Foreclosure Consultant Laws"? Does the law apply?

I appreciate any feedback.


My good friend @Brian Gibbons  is worth a phone call.   He has got this space owned and he can shoot you strait.

Hi @Fred H. and thanks @Douglas Dowell for the shout out,

Stay away from distressed sales with sub2, look for low equity deals that are not behind on payments for sub2, lease option assignments and wrap - aitds.

A great attorney for distressed property is

You are only as good as your RE team in distressed property in CA, lots of consumer protections.


My Ca bus model

sub2, lease option assignments, and wraps on low equity current deals

all cash for delinquent deals, negotiating delinquent seconds

installmet sales on free and clear houses

All no banks, using seller financing or private 1st mortgages

You must have mentioned buying from folks in foreclosure for your attorney to suggest you look into the FC laws, if that's where you're fishing you better know the rules of that game, it's not a place for newbies to tread really, you talks with such a seller can open you up to claims that can burn you and as to what is said, the owner will most likely be believed over a buying investor in that climate.  

You should give @Brian Gibbons a call he is very educated on this.

Joe Gore

Thanks everyone for the feedback. I did contact Brian, I'm waiting to hear from him.

Hi everyone,

Quick question for those above - I am currently looking at a few properties in CA that are on the MLS that do need some repairs. One is a 2-4 unit with a seller that has almost no equity and the other is a commercial multi. There is one more that recently went off market that I would like to try and put an offer together on that is a commercial multi but needs a good chunk of rehab.

I know there have been some interesting posts about subject-to triggering the 'due on sale clause', but for lease-options should I run into that issue? All of these owners are investors so I am hoping they are more willing to be 'creative.'

I am a big fan of the make a lot of offers at prices that make sense and wanted to see if I could add this to my strategy going forward. For context, I would have thought about trying to get the seller to carry a chunk on these instead but I have yet to find a lender (not without trying) that will let me do that in the 2-4 unit and in commercial without putting 20-25% down in the first place.

Lastly, for the off market I can see how I can also sell the fact of no commissions, but for the MLS properties, what is the approach working with the agent? For the lease-option is there commission due on signing of the option or can it be deferred until I decide to purchase in 1-3 years?

Thanks for the help.



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