Subj2 And Recording Deed
I have acquired a "subj2" property and have found a buyer; we are doing a wraparound.
Do I need to record the deed?
And what about the homeowners insurance from the buyers end?
I do not want to do anything to trigger the "due on sale".
All advice is greatly appreciated.
If you don't record the deed, then you don't own the property. Selling it without owning it would be a major no-no.
It's a little late for you, but for others reading, these are questions that you need to have the answers to BEFORE you start aquiring properties. Always, always have your gameplan in place before jumping into the game.
Don't know the specifics of your deal, but answering generally here it goes:
1)Yes, record the deed immediately.
2) The easiest way to do insurance is for you to get a landlord's policy and your "buyers" to get a contents and liability policy. Your insurance would have the lender as additionally insured and your buyers would list you as additionally insured. But this is just my opinion.
The seller's have already violated the due on sale clause by selling the property to you without paying off the mortgage. Now it is completely up to the lender if they want to pull the "trigger." In most cases, they won't unless you stop making payments. However, always have a backup plan in place, just in case.
Roger
Hi rajwarrior,
Thanks for the reply. Sorry, I should have clarified that I did a 90dy option agreement with the seller. I did not know if I wanted to pursue keeping the property myself and do a lease option w/land trust or just rent the property out. I was actually able to find a buyer under "2 weeks".
However, after submitting this post we are having my attorney set things up through a Land Trust.
Thank you again for your advice!
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Quote:
On 2004-06-27 21:47, rajwarrior wrote:
If you don't record the deed, then you don't own the property. Selling it without owning it would be a major no-no.
It's a little late for you, but for others reading, these are questions that you need to have the answers to BEFORE you start aquiring properties. Always, always have your gameplan in place before jumping into the game.
Don't know the specifics of your deal, but answering generally here it goes:
1)Yes, record the deed immediately.
2) The easiest way to do insurance is for you to get a landlord's policy and your "buyers" to get a contents and liability policy. Your insurance would have the lender as additionally insured and your buyers would list you as additionally insured. But this is just my opinion.
The seller's have already violated the due on sale clause by selling the property to you without paying off the mortgage. Now it is completely up to the lender if they want to pull the "trigger." In most cases, they won't unless you stop making payments. However, always have a backup plan in place, just in case.
Roger
[ Edited by RE_DreamMaker on Date 06/28/2004 ]
Roger,
Lets split hairs a bit...
Assume one agrees a subject too deal. Assume further that the present owner (the seller on the subject to terms) agrees to have the property put into a trust and then the beneficial owner is changed to reflect the new buyer. All the paperwork is done correctly.
In this case the 'deed' is not transferred into the buyer's name but into the trust. Only when the loan is paid off would the trust have the deed recorded into the name of the buyer.
The buyer above is the investor. After doing the above, they sell on the property on either a L/O (no real sale bit an option to sell) or they use another Land Contract. The seller (investor) clearly discloses their position and the fact that they do not have the title in their name at present. The title will be provided to the end buyer when they are ready to refinance and cash out the investor. The terms and conditions being such that the funds received will also cash out the investor's position to the original seller so title moves all the way forward to the end buyer.
I know the above can be legally set up and be executed cleanly. Hence I would say that you can do a subject to deal with out 'recording the deed' as was implied.
Comments or questions? Am I missing something in what you wrote?
John
[addsig]
active_rei:
In your scenario, a deed should be recorded immediately as Roger suggested, only it would be a deed from the owner/seller to the trust itself. Even though this isn't deeding directly to the end buyer, it is necessary in order to remove the orig. seller from the title chain (so that any future liens, financial problems on the seller's part can't attach to the property).
Andy
Yep John, you missed something.
In order for the deal to be classified "subject to" ie where the investor takes title/deed to the property subject to the existing mortgage, the deed has actually be transferred. Whether you, as the investor, take title in your name (or company) or whether you junk up the deal by running it thru a landtrust, as Andy said above, the deed still must be transferred.
Now if the deed is transferred to a landtrust, then there will be a new deed listing the owner as 123 trust, or whatever you named it. At that point, you, as the investor, can sell it however you wish. If you want to say that you do not currently have title, I guess that you can (though I'm sure that would scare some people off from the deal). However, if you control the actions of the trust (and you would) then you do own the title, and so I don't understand the reason for complicating the transaction.
Roger