Subject To
Acquiring a property by taking over the existing mortgage payments without formally assuming the loan.
Definition
A "subject to" acquisition means the buyer takes title to a property while the seller's existing mortgage remains in place. The buyer makes the monthly payments on the seller's loan but doesn't formally assume it — the loan stays in the seller's name. This strategy allows investors to acquire properties with little or no money down while benefiting from the seller's existing loan terms, which may include a lower interest rate. The primary risk is the due-on-sale clause — the lender technically has the right to call the loan due when ownership transfers, though this rarely happens in practice. Subject-to deals require careful legal documentation and are best suited for experienced investors.
Related Terms
Creative Financing
Non-traditional methods of financing a real estate purchase, such as seller financing or subject-to deals.
Seller Financing
When the property seller acts as the lender, allowing the buyer to make payments directly to them.
Lien
A legal claim against a property that must be satisfied before the property can be sold or refinanced.
Due Diligence
The investigation and analysis an investor conducts before purchasing a property to verify all material facts.
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