Hi, I’m just getting frustrated because I’ve passed up on many decent looking SUB2 Deals already. I’ve called about 5 - 10 local title companies and most of them scratch their head when I mention Sub2. Others say they won’t close them and they aren’t comfortable with something like that.
Should I be using different terminology when speaking with them like ask them if they’ll help me close a deal where the seller is agreeing to Deed their house to me?
I operate in the Cleveland Ohio area… if anyone has any connections there, PLEASE, PLEASE send me a Message.
Try calling at least 5 - 10 every day. Just look up title company on yellowpages.com and you should find a ton in your area. Also, go to your local REIA and ask everyone what title company they are using. This goes the same for hard money, lawyers, real estate agents, etc… Just ask and people will tell you.
Are you calling them Sub2 deals when you speak to the attorenys? This could throw them off. Just tell them you are taking over the payments ansd maybe thet will help.
I agree with the other poster about utilizing your local REIA for suggestions on who to use. Someone in your area is taking over payments and they are either using a local attorney to close it or they are closing them on their own which also works.
[b]I don’t know if you’ve solved this problem yet, or not, but let me give it a stab.
We DO NOT NEED a title company to close a Subject To deal on the “buying side.” We just need the ability to notarize and record the deeds after checking the title ourselves. If the title isn’t what we expected, we can walk away.
When selling…a buyer may ask for title insurance. This is only useful when he is actually getting title, but not before, unless something is being recorded in the buyer’s favor (which we don’t allow when seller financing on a contract). Why? Because if the buyer defaults, we have to go to court to remove the buyer’s memorandum, etc. That defeats the “contract for deed” idea.
Otherwise seller financing, say on a Land Contract, where the title doesn’t transfer until we are paid off, is effectively the same thing as a Lease / Option in that neither the tenant/buyer nor the end/user/buyer gets a deed until they pay us off 100%, so getting title insurance is a premature move.
So, we would arrange for title insurance at the time of final closing, at the buyer’s expense, but not before.
So, again, there is no need for a title company, or title insurance when buying Subject To. If we MUST have title insurance (for some reason?), because we don’t trust the seller’s word, and we’re giving them a bunch of cash, then we could simply describe the “Subject To” transaction to the title company as an “AITD” (All Inclusive Trust Deed). They should understand that concept. If not, you’re at the wrong title company in the first place.
As an aside, AITD’s are not necessarily the same thing as a Subject To transaction. We are taking title subject to any existing financing in both cases, but AITD’s were “subject to” hybrids created to get around the Due on Sale clause back in the early 1980’s. Then, the AITD’s typically left the seller on title as a minority title holder (10%) as a technicality. This effectively avoided a “full transfer” of ownership which would have given banks the right (excuse) to call the loan due, collect new fees, and “upgrade” the interest rates they wanted to charge.
This was at a time when banks wanted 18% for 30-year loans, and sellers were owner financing at only 10% (in direct competition with banks; using the the bank’s old, low-interest, rate loans against them!).
In the case of a Subject To transaction, this would be an AITD on steroids, in that the buyer (us) are taking full title with a full transfer, subject to the existing liens and loans (without leaving the original borrower on title with us).
It makes a heck of a lot of sense! You betcha! Wow! Holy Toledo! Thanks a lot javipa! What a beautiful string of pearls you cast, my friend!
I’m in the midst of my first sub2 deal and you, kind Sir, have provided me with a much-needed crash course in the fine Art of Sub2.
Here’s to you! :beer