Subject-to

Subject-to

Subject-to is a way of purchasing property when there is an existing lien (i.e., Mortgage, Deed of Trust). It is defined as: "Acquiring ownership to a property from a seller without paying off the existing liens secured against the property. It is a way of essentially assuming a non assumable loan. This technique is what you see gurus touting on late night infomercials. While the technique is not inherently illegal and can be an excellent tool in an investors "toolbox" one should be cautioned against some of the potential risks of entering into such agreement.Investors or buyers who are acquiring property using this technique are often not experienced real estate professionals. One risk that is largely unspoken by gurus and teachers of this method is the risk of the original borrower of the note that the property was taken subject to filing bankruptcy. In this circumstance the investor owns the house and equity in the house however the original borrower still owns financial commitments to the loan taken subject to.The loan can be included in the bankruptcy and the property could likely end up being foreclosed on by the original lien holder.Gurus also teach that the investors in "subject-to" deals are free from liability. This couldn't be further from the truth. You could be subject to charges of equity skimming and various types of fraud charges... watch out if you're dealing with an FHA or VA loan. It could turn into a federal crime.Some techniques teach to hide the ownership of the property by placing the property in a trust and selling the beneficial interest of the trust. This is an attempt to avoid triggering the due on sale clause (which is found in most conventional mortgages).Because of the St Germain Act , conveying property into a trust is permissablle and does not not violate the due on sale clause.. The due on sale clause is widely thought of as not being a threat to the investor because mortgage companies are not active in calling notes due in cause of violating this clause in a mortgage. However some mortgage companies could consider this practice to be fraud to a certain degree.That being said--for short term this technique can be a wonderful tool for the experienced investor.


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  • Subject — may refer to: *An area of interest, also called a topic meaning , thing you are talking or discussing about . It can also be termed as the area of discussion . See Lists of topics and Lists of basic topics. **An area of knowledge; **The focus of… …   Wikipedia

  • subject — n 1 *citizen, national Antonyms: sovereign 2 Subject, matter, subject matter, argument, topic, text, theme, motive, motif, leitmotiv can mean the basic idea or the principal object of thought or attention in a discourse or artistic composition.… …   New Dictionary of Synonyms

  • Subject — Sub*ject , n. [From L. subjectus, through an old form of F. sujet. See {Subject}, a.] 1. That which is placed under the authority, dominion, control, or influence of something else. [1913 Webster] 2. Specifically: One who is under the authority… …   The Collaborative International Dictionary of English

  • subject — [sub′jikt, sub′jekt΄; ] for v. [ səb jekt′] adj. [ME suget < OFr < L subjectus, pp. of subjicere, to place under, put under, subject < sub , under + jacere, to throw: see JET1] 1. under the authority or control of, or owing allegiance to …   English World dictionary

  • subject — sub·ject / səb ˌjekt/ n: the person upon whose life a life insurance policy is written and upon whose death the policy is payable: insured compare beneficiary b, policyholder Merriam Webster’s Dictionary of Law. Merriam Webster …   Law dictionary

  • Subject — Sub*ject , a. [OE. suget, OF. souzget, sougit (in which the first part is L. subtus below, fr. sub under), subgiet, subject, F. sujet, from L. subjectus lying under, subjected, p. p. of subjicere, subicere, to throw, lay, place, or bring under;… …   The Collaborative International Dictionary of English

  • Subject — Sub*ject , v. t. [imp. & p. p. {Subjected}; p. pr. & vb. n. {Subjecting}.] 1. To bring under control, power, or dominion; to make subject; to subordinate; to subdue. [1913 Webster] Firmness of mind that subjects every gratification of sense to… …   The Collaborative International Dictionary of English

  • subject to — 1》 likely or prone to be affected by (something bad). → subject subject to conditionally upon. → subject …   English new terms dictionary

  • subject — [adj] at the mercy of; answerable accountable, apt, at one’s feet*, bound by, captive, collateral, conditional, contingent, controlled, dependent, directed, disposed, enslaved, exposed, governed, in danger of, inferior, liable, likely, obedient,… …   New thesaurus

  • subject — ► NOUN 1) a person or thing that is being discussed, studied, or dealt with. 2) a branch of knowledge studied or taught. 3) Grammar the word or words in a sentence that name who or what performs the action of the verb. 4) a member of a state… …   English terms dictionary

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