Hello everyone,

Luke posted a question below, that has been on my mind also. But I'd like to be a bit more specific.

I'd like to know how "Subject To" transactions occur as a licensee who stumbles onto a prospective, appropriate deal . . . for his own portfolio.

I am located in the suburb of the San Fernando Valley, which is part of Los Angeles, California.

I was recently told that a licensee in California cannot do a "Subject To" transaction for himself, because this type of transaction involves circumventing the "due on sale" clause (also know as an "acceleration clause"). Apparently this is because the lender would no longer have a relationship with the "new owner", and no longer have the ability to invoke the due on sale clause. This is a normal "option" that the lenders normally have, but is pretty much un-exercised these days.

Even though I have been told that this process is not against the law, it apparently is considered to be an "unethical" practice in California, to "circumvent" the due on sale clause.

However, it is my understanding that a "Subject To" transaction is O.K. if you're representing someone else. And that there is a checkbox on the CAR form that indicates this type of transaction is perfectly alright. So what is the difference?

Can anybody shed some light on this issue?

Is this type of transaction only valid in California, if the lender agrees? Would the lender ever agree when it is in their best interest to simply re-write a new mortgage with a higher interest rate? (and maybe kill a deal in the process?)

Thanks in advance,

The difference being an investor can for the most part claim ignorance and get away with it.
As liscensed professionals we are held to a higher standard because we are supposed to be trained what is ok and what is not ok.There is no law on the dos clause all the lenders put it in there.

Lenders are greedy little buggers and want you to get a new loan"can you say closing costs,origination fees" and "get you into a higher interest rate to make more money".

You will see alot of investors assuming these mortgages at 5 percent interest and then renting out to make quick cash.

If you are an agent you can basically do the same thing as subject 2's but use a trust instead which will not trigger the dos clause.Most lenders never use the dos but with loans at all times lows and rates to go up they might start to use it more.

Super Realtor,

Thank you.

hey brad
im in simi valley and im familiar with structuring subject to using a land trust. let me know if you find any properties and i can help you facilitate the transaction.

IM A SELLER , A BIG REALESTATE COMPANY HAS SENT ME A CONTRACT TO BUY MY PROPERTY I NEED ADVICE I NEED A PRO TO READ IT JUST ADVICE IT IS A SHORT ONE PAGE SALES CONTRACT PLEASE READ THIS CONTRACT & TELL ME WHAT IM ENTITLED TO AND IF ANY CATCHES THANKS MY E-MAIL IS LANDMONEYTAX@YAHOO.COM SEND YOUR E-MAIL & I WILL FOWARD CONTRACT THE BUYERS WEBSITE IS WWW.SELLYOURLOT.COM THE PERSON TO WHOM I TALKED TO IS ALAN HERNANDEZ PHONE 1 800 499 6199 EXT. 3673 . PLEASE SOMONE HELP ME I JUST NEED A LITTLE ADVICE THANKS . RICHARD