Sell Subject to existing loan
How can you Sell the property Subject to an existing loan? Subject to an existing loan is a transaction when a buyer assumes or takes over the debt payments of the seller. This is an ideal case for sellers that have very little or no equity. Another case where this can be very beneficial is if the owner is behind on payments and facing foreclosure, or who owes more for a property than it is worth.
In the ”subject to” transaction, the buyers take over the debt payments of the seller and make payments for the seller on the seller’s behalf.
The buyer issues a promissory note to the seller. Seller deeds/transfers the property to the buyer. If the buyer defaults, the seller can start the foreclosure process and gets the property back. The buyer will lose all down payment and closing costs that were paid when the property is purchased.
Another option is to sell a property on Contract for Deed. This in fact, is the preferred method that we recommend. Call us to find out why and we’ll provide all the details behind it free.