Subject to and selling who does Escrow issue check to?

Question

As I understand it.  When taking over properties subject to.  The title doesn’t change from previous owner.  When selling does Title company make a check out to the owner on title or will they pay the investor directly?

My scenario:  I took over a house years ago, but name not on title.  Now I’d like to sell it and have proceeds directly paid to me since it has appreciated nicely. What will the previous owner have to do, if any?  Thank you.

David M. · Answer

@Tou V.

Holy!  You never recorded the deed?  That will be interesting if the irs ever audits you since you are claiming to be a landlord of a property you don't own!  lol

Not entirely sure about your question.  I would think nothing.  The date of the transaction still stands.  You are just very late in recording the transaction.  What your seller does with his tax filings is his business, but if he reported his sale when it was made, it follows the paperwork.  The lack of recording does not invalidate the sale, it just does NOT get you on to the chain of Title.

Wayne Brooks · Answer

When one buys subject to, title Does go to the buyer.  You didn’t do a sub2 if you didn’t get title.  What kind of agreement/land contract or other contract do you have?

Megan Templeton · Answer

Hello @Tou V. Depends on how the subject to agreement is written - should be reviewed by atty

Joe Splitrock · Answer

@Tou V. you misunderstood how subject to works. Title does transfer, but the mortgage doesn't. Failing to transfer title puts you at risk of loosing your property. If the property sold today, the title company would not give you a check since recorded ownership is in someone else's name. For future reference, pay an attorney when writing contracts to help make sure you do things legally and are properly protected.

Also be aware at the time of sale you are responsible for depreciation recapture and capital gains. Hopefully you have a tax professional, so you don't make DIY mistakes on that too.

John Mocker · Answer

Tou,

How is the insurance written.  If the policy is in your name but you are not on the title to the property it could present a problem at claim time.  Contact your agent and find out how to make sure that the claim would be covered.  If you have to list both names on the policy, see if they will list you first.  The first named insured has the most rights on the policy

Wayne Brooks · Answer

Okay...what you’re missing is the owner actually signing the deed over to you.  Get a current title search done to verify that no liens/judgments against the owner have been recorded, since he is still the legal owner..

Tou V. · Answer

@David M.

Thanks for the info.

Tou V. · Answer

@Wayne Brooks

Have a contract that states I’m taking property subject to current loan.  That I’ll pay the loan, taxes, etc….  directly to the bank, tax assessor, and insurance company.  All rental and future proceeds whether positive or negative are mine.  Seller is also willing to do any additional paper work needed to get this sorted out.

Wayne Brooks · Answer

@Tou V. It doesn’t sound you did an actual “sub2” as typically defined.  You said you have been paying “as per your contract”.  What Exactly do you have in the way of a contract? It makes a Big difference in what you can do, and how you do it, to sell.

David M. · Answer

@Tou V.

Well...  Let me back up.  I guess technically you may own it, but by not recording the deed you haven't basically put yourself into the chain of Title.  Your seller could actually sell the property to somebody else, for example, since nobody else (e.g. a Title company) has no idea that the property was deeded to you.    Double check with a qualified professional or two, but if that did happen you would be "stuck."  Meanwhile, nobody will "officially" purchase it from you since official records don't show you as the holder of Title.

Subject to and selling who does Escrow issue check to?

Most Popular Reply