In recent years, there has been a huge revival in end buyers and investors alike purchasing homes subject to the existing debt.

Selling a home “subject to the mortgage” is a real estate transaction where the seller transfers ownership of the property to the buyer, but the existing mortgage on the property remains in the seller’s name. In simpler terms, the buyer takes over the property and agrees to make the mortgage payments, but the mortgage itself stays under the original seller’s responsibility.

The basics:

1. Transfer of Ownership: The seller sells the property to the buyer, and legal ownership is transferred.
2. Existing Mortgage: The mortgage (loan used to buy the home) remains in the seller’s name. This is different from the more common practice where the mortgage is paid off during the sale.
3. Buyer Assumes Payments: The buyer agrees to take over the responsibility of making the mortgage payments. They essentially step into the shoes of the seller in terms of the mortgage.
4. Seller’s Liability: Even though the buyer is making the payments, the seller remains liable for the mortgage. Experienced subject to buyers use performance clauses to address these concerns.

Why would a homeowner consider selling their home subject to?