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If you have done one or more subject-to transactions, then the hard facts of the matter are that you have likely done one or more more subject-to transactions than your real estate attorney. Of course, there are exceptions and some real estate attorneys specialize in subject-to deals, but the majority of them have never actually closed this type of creative financing deal. This may be a matter of great concern to you. After all, you rely on your attorney to make sure all the I’s are dotted and all the T’s crossed. However, just because your attorney has not handled this type of closing before does not mean that you cannot work with them now. It does mean, however, that you will need to be very careful to provide all the information and instruct your attorney on exactly what you need.
Some things to remember:
• Subject-to transactions have fewer parties:
It will be just you, the seller, the seller’s lawyer (possibly), your lawyer and the current lender (who will not be present of course)
• You need to be sure you get power-of-attorney for handling the loan:
You cannot rely on the seller to always be available should you need to speak with the lender in the future and many sellers will not be helpful should you try to sell the property again.
• Have your own contracts drawn up by an expert:
If your attorney is not a subject-to expert, then it will pay off fast for you to have a subject-to contract drawn up by an expert in the field. You can use your own attorney, but their contracts may not fully protect you – particularly as an investor. Make the one-time investment in the contract, and from then on bring your own to every closing to make sure that you are covered.
• It will help to brief your real estate attorney:
(Always, be polite. Lawyers are used to being the experts, and your lawyer may not feel comfortable being lectured. However, if they “blow you off,” this attorney may not be the right one for you.) Let your lawyer know exactly what you want out of the transaction. Of course, you want the deed to the property, but you also want to be protected in the future, be able to modify the loan payment arrangements, etc.
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com.
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