are subject 2 owner exsiting financing illegal?

[Aaron Cheatham]

Hello,

Are subject 2 existing owner financing deals illegal in pa? if so could i do a rent to own situation?

thanks in advance
aaron

[Manny Cirino]

Hey Aaron,
I have been on this topic for about 2 weeks now and here is what I have found here in Florida. When transferring over the title the lender must be notified(subject to change depending on the lender agreement) in order to ethically take over the new buyer/investor must qualify with the lender in order to assume the loan. So it kind of defeats the purpose of it being a sub to deal. The lender can call the mortgage due but if it performing why would they?

what I have found is most investors in my area buy sub to and flip the property retail right away. They won't take the risk of long term holding. Now of coarse it better be a good deal because if you don't have a tenant that mortgage is coming out of pocket and between holding cost an realtor commissions you might not have any profit left. For the 1 investor I met who did rent them he had the owner start a land trust, named himself the trustee, added him self to the insurance police or have the seller sign a limited power of attorney to legally be able to receive info and make changes on loans or insurance. He also makes the seller sign all rights of direction over to avoid the seller from being able to sell without him knowing.

If the mortgage is being payed you give the lender no red flags but if you default the lender still may not realize title was transferred. But when th seller gets that notice it might worry him and cause him to worry and questions things. Who know what that will bring!

But the end of the day I am not a real estate attorney and I don't live in PA seek real legal advise.