🏠 Real Estate: Types of Subject-To Deals

These involve acquiring property “subject to” the existing financing (often the mortgage) staying in place.

1. 🔒 Standard Subject-To Existing Mortgage

• Buyer takes over payments on the seller’s existing mortgage.
• Title transfers to the buyer; loan stays in seller’s name.
• Common when seller is behind on payments or facing foreclosure.

Example:
Seller owes $180,000. Buyer agrees to pay the mortgage monthly and takes over the house without getting a new loan.

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2. 🔁 Subject-To with Wraparound Mortgage (Wrap)

• Buyer agrees to make one payment to the seller, who continues paying their original mortgage.
• Used when seller has a low-interest rate, and the buyer pays more, creating spread/profit.

Example:
Seller has 3% mortgage. Buyer agrees to pay 6% on a larger balance, and seller profits from the difference.

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3. 📜 Subject-To with Seller Financing

• Subject-To + Seller carries a second note for the equity portion.
• Seller becomes the lender for the buyer’s “down payment.”

Example:
$200K house, $150K mortgage. Buyer pays Subject-To on $150K and signs note to seller for the $50K equity.

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4. ⏳ Subject-To with Lease Option / Lease Purchase Hybrid

• Property is leased with option to buy, while underlying loan remains in seller’s name.
• Can be low-risk way to test out Subject-To without full title transfer upfront.

Used when buyer wants flexibility or seller is cautious.

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5. 💵 Subject-To with Contract for Deed (Land Contract)

• Title remains with seller until full payment is made.
• Buyer takes possession and makes payments as if owning, but title is only transferred when full terms are met.

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6. 🧾 Subject-To with Trust or LLC Takeover

• Property is transferred to a land trust or LLC to disguise the change in ownership from lender (for Due-On-Sale clause mitigation).
• Beneficial interest is transferred to buyer.

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💼 Other Subject-To Applications (Beyond Real Estate)

1. 🚗 Subject-To Auto Loan

• Buyer takes over car payments but keeps the loan in seller’s name.
• Often informal and risky without paperwork.

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2. 💰 Subject-To Business Debt / Asset Purchase

• Buyer acquires a business subject to existing liabilities (debt, leases, equipment).
• Can include franchises, small biz transfers, or distressed businesses.

Example:
Buyer takes over bakery with lease, equipment loans, vendor contracts—but doesn’t assume the debt personally.

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3. 📲 Subject-To SaaS / Digital Assets

• Buyer acquires operational control of a SaaS company or digital platform without full ownership transfer, while licensing or service agreements remain in original entity’s name.

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4. 🎓 Subject-To Tuition Contracts or Service Agreements

• Uncommon, but theoretical: Student “sells” rights to future income or benefits subject to someone else paying off their tuition/service obligation.

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5. 🏭 Subject-To Equipment Lease / Commercial Lease Takeover

• Buyer steps into a commercial lease or equipment lease without re-negotiation.
• Common in restaurants, manufacturing, gyms, etc.

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🛑 Key Considerations & Risks

• Due-on-sale clause can trigger foreclosure if lender finds out.
• Requires strong documentation, disclosures, and often attorney involvement.
• Insurance, taxes, and title risk must be addressed properly.
• Subject-To works best with motivated sellers, distressed properties, or where speed and flexibility are crucial.

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✅ When to Use Subject-To:

• Seller is behind on mortgage or facing foreclosure
• Seller has little/no equity but needs to sell fast
• Investor wants entry with no new financing
• Cash buyer wants leverage and existing low-interest rate