How To Protect Yourself In A Subject To Transaction
Why It Matters
Ensuring title control in subject‑to deals prevents costly fraud, protecting investors’ equity and financing stability.
Key Takeaways
- •Use seller as trustee to hide title change from lender.
- •Sellers may reclaim title after deal, risking investor loss.
- •Add investor’s LLC as co‑trustee to block seller’s unilateral actions.
- •Obtain trustee deed and seller’s resignation for future title removal.
- •Co‑trustee structure safeguards subject‑to transactions against fraud effectively.
Summary
Subject‑to deals let buyers take over a property’s mortgage without notifying the lender.
The video warns that sellers can later reverse the title transfer, as happened when a seller reclaimed ownership two months after closing, exposing the buyer to loss.
The presenter recommends naming the seller as trustee while adding the buyer’s Wyoming LLC as co‑trustee, securing the deed with a trustee’s deed and obtaining the seller’s resignation to prevent unilateral changes.
This co‑trustee arrangement ensures the seller cannot retake title without the investor’s consent, preserving the transaction’s integrity and protecting investors from fraud in a competitive market.
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