Subject to in Canada

[Matt Geerts]

Does anybody have any experience with purchasing Subject To Existing Financing in Canada?

Yes, there's the usual debate about the bank calling the loan, etc. I have enough resources to recover from that. I have also heard that a mortgage may actually be considered to be in default as soon as the property changes hands - that's more of a problem.

I don't need the opinion of anybody doing business in USA - I've already read a thousand of those. Canada only, please.

keywords:  sub2 sub-2 sub 2 subject2 subject-2

[Doug P.]

@Matt Geerts All institutional mortgage agreements in Canada specifically state that if title is transferred the loan must be paid in full or the lender will consider the borrower to be in default. So that thing you heard about the mortgage being considered to be in default is the same as the loan being called due.

Now in practice, the lender might not exercise their right. But the borrower is indeed 100% defaulting on their agreement if they transfer title to you without paying off the loan and the lender is entirely within their rights to demand full repayment.

If you and the seller fully understand that risk then you can decide if you want to go ahead with it anyway.

You can accomplish essentially the same thing (taking over the seller's payments) with an Agreement for Sale, and it's much less likely that the lender will care.