What is a "subject to" deal?

In real estate terminology, a "subject to" deal refers to a transaction where the buyer takes over the existing mortgage payments on a property without formally assuming the mortgage. This means that the seller remains legally responsible for the mortgage, but the buyer manages the payments. This arrangement can be advantageous for buyers who may not qualify for a new loan or who want to take advantage of the seller's lower interest rate.

In these situations, the title of the property is transferred to the buyer while the mortgage remains in the seller's name. It allows the buyer to control the property and benefit from potential appreciation or rental income without taking on the debt obligation formally.

Understanding "subject to" deals is crucial for both buyers and sellers, as it requires careful consideration of the risks involved, including the possibility of the lender calling the loan due upon transfer of ownership. This type of transaction can offer flexibility and financial solutions that traditional sales may not provide.