Sub2 deal - do I have to record the deed?

General Real Estate Investing
1

I am in the midst of a subject-to deal and I am unsure whether or not I should record the deed. I plan on either wholesaling the property or leasing it out rent-to-own to a contractor who will do the work to fix it up.

  1. What are the potential problems if I do not record the deed? Can they refinance/sell their house later to someone else if I don’t record?
  2. Do I have to pay transfer tax when they deed me the property or only if I record?
  3. If I record, is the bank likely to find out about it or is it still pretty unlikely?
  4. Is there an alternative to recording the deed that can still protect me?

Thanks!

2

look at it this way: the person whose name is on the deed is the owner

3

My question to you is, if you are not sure how a ‘subject to’ works, why are you doing one?

4

I do know how they work. I also know some people record the deed, and some don’t. I was looking for some ideas. Thanks for the “help”

5

if u do not record the deed u are not the legal owner. that means you cannot legally sell it unless you are a liscenced realtor. if u keep paying the note on a subject to and are not the owner, the folks that you are trying to help who currently own the house, will still own it and when they find out the mortgage is either paid up from arrears or they just want it back or get cute, they can and there is nothing you can do about it.

some folks do not record a deed in a situation where they are using a wrap around mortgage because the deed has to be in your buyer’s name. the investor will sometimes have a signed deed that they do not record just in case they need to act fast if their buyer (current owner) defaults, this would be in lieu of foreclosing; taking back ownership in lieu of foreclosure

6

Actually, you do not need to record it to be an owner. Recording simply gives public notice of your ownership. You just need a signed deed and an acknowledgement to make the deed valid. The pitfalls of not recording however, is that liens may get attached to the property based on the original seller’s actions or the seller may resell the property since no one knows you own it. First deed recorded owns the house even though you are the owner. You would have to go to court to get it back but the costs are prohibiting.