Buying property – “due on sale” bank clause

[limestone]

Someone told me that I could buy a property “subject to” the existing loan. That the seller could just deed the property to me and I could take over the payments. Is this legal and what will the bank do when they find out? What about the “due on sale” clause? Can anyone help me on this. It sounds like an incredible way to buy property, but I don’t particularly want to go to jail.

 

[nextwife]

Someone told me that I could buy a property “subject to” the existing loan. That the seller could just deed the property to me and I could take over the payments. Is this legal and what will the bank do when they find out? What about the “due on sale” clause? Can anyone help me on this. It sounds like an incredible way to buy property, but I don’t particularly want to go to jail.

You won't go to jail,. but you need to be financially prepared to pay off the mortgage IN FULL if the lender discovers the sale and exercises their right to call the ENTIRE balance due.

 

[De Facto]

Someone told me that I could buy a property “subject to” the existing loan. That the seller could just deed the property to me and I could take over the payments. Is this legal and what will the bank do when they find out? What about the “due on sale” clause? Can anyone help me on this. It sounds like an incredible way to buy property, but I don’t particularly want to go to jail.

It would not be criminal, but the mortgagee could demand full payment from the seller. If the seller does not pay the mortgage in full upon demand, then the mortgagee could foreclose on the property notwithstanding the fact that you are the legal owner and had been making the monthly mortgage payments.

It's a risky endeavor.