In real estate transactions, a property purchase structured “subject to” means the buyer takes ownership while the existing mortgage remains in the seller’s name. Essentially, the buyer gains control of the property and makes mortgage payments, but the original loan stays with the seller. For example, an investor might acquire a property “subject to” the existing financing to benefit from the favorable interest rate of a loan originated years prior.
This approach can provide advantages, particularly in situations where obtaining traditional financing is challenging or time-sensitive. It can facilitate quicker transactions and potentially offer more favorable terms compared to securing a new mortgage. Historically, it was a common method in seller-financed deals, allowing buyers to gain immediate access to a property while the seller retained some control and the security of the loan.
