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Contract TermsInvestor Strategy
Subject-To & Creative Financing Framework
August 5, 2026 Joshua A. Ransom
Understanding Subject-To Deals
Buying "Subject-To" means purchasing a property while leaving the existing mortgage in place in the seller's name. The buyer takes legal title via deed and assumes responsibility for making the monthly mortgage payments directly to the lender or escrow servicer.
Managing Due-on-Sale Clause (Garn-St. Germain Act)
Lenders retain the legal right under the "Due-on-Sale" clause to accelerate the mortgage balance if title is transferred. Proper Subject-To structuring utilizes land trusts, third-party loan servicing accounts, and comprehensive seller disclosures to mitigate risk.
- Full Seller Disclosure: Written acknowledgment by seller that mortgage stays in their name.
- Licensed Servicing Company: Automated payment disbursements to ensure zero missed lender deadlines.
- Insurance Wrap & Loss Payee: Updating hazard insurance policies with buyer named as additional insured.