Sub-To in St. Louis MO

Hey board members are there any of you doing sub-to in MO. I was contact by a member that says he has been warned and told by local lawyers that its illegal and he can’t find any title companies that will touch a deal. Can someone doing it there post up and let him know if it is illegal (OR NOT) in MO and maybe tell him what title company will do one for him. St. Louis area.
Thanks alot.
J. London

Whoever told you that is an ignorant twit (said in the most respectful way possible). We’ve purchased real estate using Sub2 financing IN Missouri ourselves, and we know for a fact it’s not illegal.

We also know that title companies don’t always want to insure Sub2 deals, because they either don’t understand how mortgage wraps work, or how AITD’s work.

Just look for a more experienced and professional title company. If we insist on getting title insurance when buying, using Sub2 financing, then we explain that our deal is exactly like a mortgage wrap, except we’re not wrapping anything, or it’s lke an All Inclusive Trust Deed, except there’s no trust (unless we’re actually titling in a trust…).

The only “exceptions” on the insurance in these cases will be the existing loans themselves. That’s no problem. We expect the loand(s) to be there.

That all said, why in the world are we using a title company to buy real estate using Sub2 financing? That’s completely unnecessary.

Just check the title, and make sure only what we expect to be recorded against the property is there, and then record the deeds (in the right order). Otherwise, renegotiate the price, or walk away.

Meantime, our buyer will pay for any title work and insurance, not us, when it’s time to sell, not when we buy.

Of course the question comes, “Won’t our buyers want title insurance?”

Yes, and when they pay us off they will pay for the title insurance at the time their lender funds the loan, but not us. Plus, if you’re selling on a Land Contract, without an actual transfer of title, the title company won’t insure the title, becaues the deed isn’t transferring “today.” Anything could happen to the title in the meantime, before there is an actual transfer of the deed two years from now.

Maybe this is what the title company is telling you? That they don’t insure “Land Contract” transactions (until the buyer is actually paying off the loan). Then it’s up to the seller to provide a ‘marketable title’ free and clear of any encumbrances not already acknowledged at the get-go.

I’m making the assumption that you’re flipping a Sub2 deal, and not taking possession as an owner occupant.

Hope that helps. :beer