From my understanding a lot of people do the following transaction:
A seller has a house worth say 110,000 and he owes 100,000 he contacts you since he really just wants to be out of the house however he does not really have enough equity to get a real estate agent and wait 6 months if he is lucky to sell it etc.
You agree to buy his house by taking over his mortgage payments.
Questions:
- What happens to the title in the house do I get my name on deed and the seller gets replaced.
- Why would the seller agree to keeping the mortgage in place since that ultimatley makes him still responsible.
- Wouldn’t this trigger a due on sale clause on the original mortgage.
Please Advise.
ANSWERS:
- What happens to the title in the house do I get my name on deed and the seller gets replaced.
If you are doing sub-2 I recommend that you put the property in a trust for asset protection reasons then you are the beneficiary of the trust. Also make yourself the payee on the insurance.
- Why would the seller agree to keeping the mortgage in place since that ultimatley makes him still responsible.
Because the Owner can’t afford the property or simply want’s out. There are a number of reasons.
- Wouldn’t this trigger a due on sale clause on the original mortgage.
Could it YES… Will it 99.9999% of the time NO the only way it would trigger the DOSC is if the note defaults for some reason. I have seen the DOSC triggered 2 times in my 11 years investing both times the property was going into foreclosure.
If you want to know more about Sub-2 check out $cash$'s Course. It covers it all.
Which course is $Cash$'s?
I don’t think $Cash$ actively markets his course anymore…he’s a Moderator here…send him a note and ask him. He’s pretty approachable.
Keith
I am not a lawyer but I think the Garn St. Germain Act codifies that transfering a deed into a land trust cannot trigger DOSC.