you do not get around the DOSC
You record the deed. Preferably in a corporate or LLC business structure. You can use a land Trust. I know of at least one JCL student that does use land Trusts in Florida, even though Cash doesn’t seem to need them him self. But in Florida, there is a structure that seems to be set up especially for this. Seems to have a lot to do with Floridas favorable asset protection rules.
But about the DOSC. I want you to go to the Register of deeds office and notice how many Bank Loan examiners there are from each bank that has a loan on a house in that county are waiting for someone to try and record the deed to a property that they have security to. They stand there all day long just waiting for some poor unsuspecting investor to come along and just try to pull a fast one over them. NOT!
Now why would they look at the register of deeds to check on a property? To see if someone who is late did sell or, even to see if they took out a second lien like a HELOC. I have had a mortgage on my house before that had a DOSC type clause if I took out a HELOC, or other loan. I took it out anyways. They are not going to investigate every property they have. To much costly manpower, even with them online in many counties. But they might if the payment becomes severely late.
Now, what if they do Call the loan due? CAll Gary and he will put it into a trust for you real fast, or at least set you up with Bill Gatten. Just in jest Gary, that would probably be too late of course.
But seriously. Any purchase you make has to be prudent and have an exit strategy. Is there enough equity in the house to refinance? Is your credit good enough to assume the mortgage? All things considered I doubt banks will call due a loan that is not late, but if they do, chances are they are going to want to have you or your entity become liable for the loan, or maybe even your buyer, as you and they now have an equitable interest. The longer you have possession the better your or your buyer’s chances to do this. It is not the end of the world.
Make sure your buyer has awareness of the underlying mortgage and the existence of the DOSC, and it’s implications.
The worst that can happen?
You give the deed back to the seller, so he can try to rent it out. You make some money, you paid the mortgage for a few months and gave your seller some breathing room that they needed, your buyer needs a new house to buy and if you are out there doing this all of the time, you probably have a house or will soon have a house for them to move into.
This is not fraud. Fraud assumes a lie to a directly proposed question. You are, nor is your seller, nor anyone else, required to tell the bank up front that they are doing a SUB2 purchase. In any case it is only a right of the bank to call it do, not a legal obligation on there part. No federal mandate that requires a Bank to call the loan Due (YET, just wait until the do gooders in D.C. try to fix things that aren’t broken)
Read Bill Bronchicks Article “There is no Due on Sale Jail”
Assuming you cover your bases, don’t buy with negative equity or sell with negative cash flow you should come out okay. Unless of course you are in the insane parts of the country when it comes to appreciation rates, but even then always buy right.