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Hi,
Would like to start a new discussion on the above topic. What folks are doing, especially in Florida. What documentation and forms used to protect the parties. Other details. And some actual deals.
I’ve done many subject to and owner financing over the years (most of my purchases). My typical deal has been to clearly explain what I’m doing with the seller and how I work. A lot have had institutional mortgages/notes on the property that I take subject to. And there will almost always be a seller carried note for the purchase (a lot only had that, and where better deals).
With a institutional note on the property, I’d have the seller sign paperwork giving my management company control over the property, note, etc. Usually a notarized power of attorney. I’d have my management company contact the institutional lender with that info so they could deal with the servicing of the note, which would be set up on some form of auto pay each month.
I’d have the seller transfer the property to a trust, often with my trustee. And in that case, I’d get insurance in the name of the trust, with additional insureds of the seller and the institutional lender. If the seller was the trustee on the trust, I’d have the seller (or help him) get or change the insurance to a rental policy in the trust, the same way. In this case it would be a form of a lease/option to exercise later.
If the seller occupied the property, I’d have an incentive for him to leave (down payment, option money, etc.), but often he was moving or had moved anyway.
Never had an issue with Dodd Frank or any of the institutional lenders over the years for the most part. However, I’ve been MUCH more careful with purchases since 2015.
I’ve only got one property left with an institutional note on it which will shortly be paid off, and need some more houses with debt on them.
Thoughts, ideas, dos and don’ts?
It’s not that it’s broke, or there’s no “right” way, but laws have changed since I’ve don’t subject too and I’d like to stay up to day on what folks are doing to keep on the right side of the laws and still get the job done. But there sure can be “wrong” ways to do it.
I’ve had no issues over the several that I have done over the years, and still have some of them. I’ve gravitated to seller financing instead of subject to, but would still do subject to should there be a good deal to be had, especially with some of the super low interest notes out there. My deals have been very simple over the years, and certainly not as well “disclosed” as some folks do today, a lot being done verbally. (I’ll probably change that a bit). And always nice to hear techniques and good ideas.
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