Overcoming The Due On Sale Clause In Subject To
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3 жыл бұрынI've had the due on sale clause called on me five times.. This is a real concern when buying subject to to be aware of and I'll explain how the due on sale clause happened to me. So now that the bank wants us to pay that loan off... How did I overcome the due on sale clause when I bought the house subject to?
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❎ I am not a CPA, attorney, insurance, contractor, lender, or financial advisor. The content in these videos shall not be construed as tax, legal, insurance, construction, engineering, health & safety, electrical, financial advice, or other and may be outdated or inaccurate; it is your responsibility to verify all information yourself. This is a KZfaq video for entertainment purposes ONLY ❎
@Opedanderson Жыл бұрын
Sounds like a very cooperative bank. In my experience, trying something like this with a banker having a bad day won't go so well.
@nananna915 2 жыл бұрын
You add so much value. Appreciate you, Pace!
@PaceMorby 2 жыл бұрын
Awesome. Glad you're getting value out of our content. Thank you for commenting, Anna.
@peterkostas6004 Жыл бұрын
Love Pace but the BS alerts are going off like crazy. Nobody in any BP forum or investing forum has been able to find this "supposed DOS clause insurance companies" There is one out of Texas that claims they do but website leads to nothing, and they don't cover seller financing. They are also not contactable. Seems like major BS and making confusion to join his course. Idk. I love pace and his stuff but you've gotten realize what his real business model is.
@enginearproductions Жыл бұрын
I agree, I think these “insurance companies “ should have been mentioned in wealth without cash. Valuable resource
@rp-wb6xn 8 ай бұрын
Have you been able to find a legit company since originally posting?
@romi929 7 ай бұрын
If this due on sale clause would be so common and if you really had to sale the properties to pay the bank in full Pace would be a poor man 😊
@peytondowns5146 13 күн бұрын
Anything is possible and I'm not arguing with anything, although if you do the math from the $ amount he charges for his courses. He makes a lot of money. Potentially more than his real estate. That kind of alternative cash flow alone makes it easy to obtain financing or payoff properties if needed. Plus his public presence he has people dumping money towards him for him to invest. @@romi929
@Cali_Girl1 3 жыл бұрын
Wow! Pace...Your Knowledge and Experience and Solutions are just SO AMAZING!!
@PaceMorby 3 жыл бұрын
Thank youu! Glad you gained value from my content.
@rendellbaldwin8946 2 жыл бұрын
Info is better than most investors. You hold no punches 💯💯💯
@PaceMorby 2 жыл бұрын
Rendell. Appreciate you, man!
@PZGwal Жыл бұрын
GOLD. Thank you Pace!
@PaceMorby Жыл бұрын
You're welcome bro!!
@eugizzzle Жыл бұрын
Great content. Appreciate the knowledge.
@jayh732 2 жыл бұрын
Wow thanks PACE!
@tonycrosby913 2 жыл бұрын
This is very valuable information.
@PaceMorby 2 жыл бұрын
Tony. Glad you gained value from this, bro!
@benjaminmiraspeaks Жыл бұрын
Holy shnite! My mind is BLOWN after watching this. Whew.
@alexkhalil2363 Жыл бұрын
Spot on brother ! And another suggestion, that you may already be doing is actually write it into your contract: we will transfer deed however if lender tries to evoke the due on sale we will transfer back and register the AFS that’s what I do. If you remedy the default by transferring back good luck to the lender in court !
@jonathanperez4555 Жыл бұрын
Can I have a copy of your contract? I am willing to pay!
@alexkabo4087 Жыл бұрын
@@jonathanperez4555 My contract is mainly used in Canada. I don't mind sharing but I would strongly recommend you get an attorney to help you. The wording is very simple but one wrong clause can cause you issues later on. Here is the simplest structure I have found: 1) Standard purchase contract in your area 2) Addendum, which states, inter-alia: a) you will take title/deed in your name b) seller will execute a quit claim deed, which buyer will hold in your trust to be used at buyers sole discretion to remedy a 'due on sale clause' or mortgage accelartion. In which case the agreement switches to an agreement for sale which will entitle you to a lien/caveat against the property The contract (addendum) should have other terms such as the purchse price equals exactly (mortgage + arrears or whatever, + $x) subject to final approval by buyer. You should get an authorization to release so you can inquire with servicing company/mortgagor. Again, lot of fine moving parts some of which may be specific to your area where a good attorney can really help you put this together. Hope it helps. Feel free to drop me a line at ak@calcorp.ca I can be of further assistance also can probably refer you to a great attorney. Cheers. Alex
@jennyclark5689 Жыл бұрын
Could you explain what AFC means?Thank you
@alexkhalil2363 Жыл бұрын
@@jennyclark5689 AFS = Agreement For Sale
@jennyclark5689 Жыл бұрын
@@alexkhalil2363 If it's not difficult for you, please give an answer, how does it work in the case of AFC?
@oldskoolfunk71 11 күн бұрын
4:37 Thank you Pace
@user-yb6yq7fz1d 9 ай бұрын
Most banks will 100% want out of these low rate loans to be able to re-lend at higher rates. In other words, expect the note to be called because a bank wants that 3% note paid off so they can re-lend the money at 8%.
@donaldclifford5763 6 ай бұрын
Do they want to pay thousands of dollars for foreclosure and eviction with the property being sold at a deep discount after a year or more and a new owner financing with a different lender? Or keep the performing loan on the books.
@user-yb6yq7fz1d 6 ай бұрын
@@donaldclifford5763 potentially - depends on the present value of the rate difference.
@paulgomez3318 Жыл бұрын
Everything just seems harder in Texas. Not as easy to escape some of these highly technical obstacles.
@AubreyArmstrong-jz8wk Жыл бұрын
Pace what company is dos insurance for when I’m doing deals
@GenerationalWealthBuilderNOLA Жыл бұрын
🙋♂️Any recommendations for due on sale insurance ??!!
@scientificapproach6578 Жыл бұрын
Great video, if you have time, can you make a video about Sub To and Executory Contract (land contract) “scary” what if scenarios. For example: What if the seller files for bankruptcy? What if the seller tries to sell the house to someone else after you complete the transaction with them? What if they sue you years later because they claim you ripped them off? What if after the transaction the seller wants to buy a new home, but the original loan is still in their name? What if the seller dies, is the lender notified? Thank you
@PeopleUncorked Жыл бұрын
Great questions! @PaceMorby any way you could address those? I love your content BTW and I'm receiving your book today!
@ab-qn7kv Жыл бұрын
You have brought up alot of great questions. Have you found the answers to any of them or a link perhaps? Thanks in advance
@MrHymatt1 10 ай бұрын
What if the seller dies?
@NickatYouTubeSucksJK 3 жыл бұрын
I wish I could give this video six thumbs up
@PaceMorby 3 жыл бұрын
Thank you bro! Glad you're gaining value from my contents!
@mitchhancock 8 ай бұрын
Where can you find due on sale clause insurance?
@bterwin9887 Жыл бұрын
Amazing
@PaceMorby Жыл бұрын
Thank you! Cheers!
@4116mari 2 жыл бұрын
Hi Pace thank you for going over this type of risk But does the bank provide us this contract?
@PaceMorby 2 жыл бұрын
No, the bank won't provide you that. Check out this episode of Sunday Service for some more in depth coverage. kzfaq.info/get/bejne/hp2fo69kqMzZZok.html
@magic1keys 4 ай бұрын
If I’m wholesaling a Subto deal, can the the backed up mortgage be negotiated to a lower amount just to be able to meet my wholesale assignment fee?
@kevinhoward5520 Жыл бұрын
Pace giving away so much free game OMG lol
@isaacepstein8971 Жыл бұрын
super good advice. i haven't seen this type of strategy online before. in another video when you told this story, you said you did a lease option, not a land contract. is this the same deal and which option is better?
@PaceMorby Жыл бұрын
Hey Isaac! It was the same deal. It really depends but I've used the agreement for sale option more when the due on sale was called on me. By the way, here's the full podcast episode. kzfaq.info/get/bejne/l7V2m9Snpqu5ZYE.html
@isaacepstein8971 Жыл бұрын
@@PaceMorby i see. thanks for the response. i'll watch the whole video. ive been watching a lot of your long form content. much better than the 5-10min videos out there. i like the sunday service podcast too. i love what you're doing. hopefully we can work together someday. i invest in SW Florida, but until now, only cash.
@andyscorner101 Жыл бұрын
It appears to be an excellent strategy. My only question would be, what if, the deeded owner now wishes to use that deed as collateral for something else he wants, ( car, boat, villa in Capri, whatever) would your agreement for sale be worded so it takes 1st priority lien position in order to negate any shenanigans by the deeded owner? What if the owner ends up with a Federal Lien against the property? Maybe he doesn't pay his income taxes or incurs othere debts which the IRS now places a lien on the property for? I believe you would be responsible, would you not, since the property is assigned the lien and you have that agreement for sale? It may seem somewhat outlandish but scenarios like this do happen when the IRS becomes involved. Your answer would be appreciated. Thank you and a really good video also.
@PaceMorby Жыл бұрын
Hey Andy! You have very technical questions and my responses to this is too lenghty for a KZfaq comment. Post this on the free Facebook group and I'll try to answer it. If not, my students can chime in! paceapproves.com/communityytc
@juzefzoozoo 3 ай бұрын
Due on sale insurance, do they charge 1% of the mortgage or the purchase price which may be more than the loan?
@B3GR8T 9 ай бұрын
Knowing that banks may come after you with the “due on sale clause”, why not just start off with the “agreement for sale” from the actual owner that way you can avoid the bank entirely
@imchristopherjamal 2 жыл бұрын
Holy fuckin mole. This is GOLD
@benvigilrepro 4 ай бұрын
I've done something similar with a carefully crafted lease option or lease purchase contract. I guess all strategies have pros and cons.
@HypocritesRoundTable 19 күн бұрын
But you don’t get the depreciation or tax benefits right?
@davidnoticiero6728 2 ай бұрын
I’ll give Pace his due, he is a fantastic salesman, he is very knowledgeable of his systems and strategies, definitely not a KZfaq hack he knows what he is selling and how to sell it. That said, as a homeowner, why would I enter into a Subject to agreement? The risk is all on the homeowner, even if you work your way almost all the risk is on the homeowner, for a seller to agree to sell Subto requires a seller to either be in a desperate economic situation where they agree to risk the buyer failing to follow through on the deal for the sake of a quick lump sum of cash, or finding a homeowner with a low level of financial literacy
@robertbabezki7313 8 ай бұрын
Do you lose yo tax benefit if you deed the property back to the homeowner or do you just have in the agreement that they can’t file on the property so you can??
@in-God-we-trust Жыл бұрын
Who is the insurance company that insures the subject to mortgage if loan is called due? Thank you so much Morby
@brewdog8568 Жыл бұрын
His shell company
@raymondhooks855 11 ай бұрын
Please name the specific company @in-god-we-trust @@brewdog8568
@raymondhooks855 11 ай бұрын
Please name the specific company that insures due on sale
@slagace4392 3 жыл бұрын
So what happens if you want to eventually sell the house but you don't have the deed? Would that bring up other issues in regards to future sales? Also what are the tax ramifications on these types of buys? If the interest statements are going to the person that is named on the actual mortgage are you not able to deduct the interest?
@PaceMorby 3 жыл бұрын
That's a bit too in-depth to be answered here in the comment section. Reach out to my students and other investors inside my free Facebook group, everyone would be more than happy to help you out and network with you! shor.by/8vxk
@reyessuarez4978 2 жыл бұрын
Cris from Chicago I’m in Chicago so excited to start doing deals with this amazing strategies!!
@alexkhalil2363 Жыл бұрын
No because you can simply assign your AFS OR you can close on your AFS thereby paying out the lender. You have the legal right to sell
@6BlackWings Жыл бұрын
Contract for deed is usually assignable to another buyer.
@jennyclark5689 Жыл бұрын
@@alexkhalil2363 Could you explain what AFC means? Thank you
@theliamkeane 3 жыл бұрын
VALUE!
@PaceMorby 3 жыл бұрын
Yess!!
@Smelyansky Жыл бұрын
What does he mean “catch up the payments” how long does that take? is it a big down payment?
@abc-pn2eb Жыл бұрын
For example if the seller is behind 6k on their mortgage, you would pay that 6k as part of the down payment to catch them up. From there, you make the monthly payments
@devonblaine Жыл бұрын
Why would we not just purchase Sub 2 with "Agreement For Sale" every time?
@Smelyansky Жыл бұрын
can you elaborate
@tr3ylv1 Жыл бұрын
Beast..🤦🏿
@knuckles745 7 ай бұрын
When Dave transfers the deed to you, with what I assume would be a quitclaim, is it a violation of the terms of his mortgage to not notify the lender?
@donaldclifford5763 6 ай бұрын
Not a quit claim. A warranty deed. No notification is ever required. But the due on sale clause is always on there.
@johanblume2621 Жыл бұрын
I wish they would bring back assumable loans like they had in the 70’s and 80’s.
@CrashBr0 Жыл бұрын
If they keep raising rates, it's just a matter of time. Everything is cyclical.
@HeyAndrewKing 7 ай бұрын
There’s still a lot of Assumable loans out there
@donaldclifford5763 6 ай бұрын
Subject to is assumable in most cases. Like pace says, one in 500 gets called by a bank. And even then it's an easy fix.
@gixxerhoff7502 Жыл бұрын
This could get really ugly.
@zeekflash6924 Жыл бұрын
If the deed is not in your name , do u still get the tax benefits.. and interest etc
@g.v.3696 4 ай бұрын
NO
@chefwltr 2 жыл бұрын
🐐
@bobhopkins433 8 ай бұрын
Pace at that point all understandable, but what happens down the road 10 - 20 years when paid off??
@donaldclifford5763 6 ай бұрын
The seller releases the hold on the deed. Same if it sells sooner.
@uniquelypositive 3 жыл бұрын
What are the disadvantages of the contract for deed? Obviously it's not ideal or you would do that every time instead of Subject To so you'd never get into the same situation
@davehall3351 3 жыл бұрын
I have done only a couple, so by no means an expert, but since you don’t have the deed you won’t be writing off depreciation (check with your CPA) and if there are issues on the property it could go back to the title holder. I learned the second one when selling on a land contract and I ended up in court over the buyer not mowing and violating city code for upkeep.
@PaceMorby 3 жыл бұрын
I love this! People helping each other out in the comment section. You guys should join my free Facebook group and share your insights with thousands of investors and students. They would also be more than happy to network and squad up with you. shor.by/8vxk
@edgonzalez186 2 жыл бұрын
Assurances regarding these: To the seller if the buyer dies while the mortgage is still in effect. / To the heirs, if the seller dies while the mortgage still in effect...what happens with the lien. / To the mortgage if the seller declares a bankruptcy int he future.
@PaceMorby 2 жыл бұрын
👍
@leanderhoward6900 10 ай бұрын
What happens if someone inherits a home with a mortgage from someone who is now deceased?
@PaceMorby 10 ай бұрын
It depends on if it has to go through probate, that prolongs the process, but it's still possible to do a SubTo deal!
@deetiligo7761 2 жыл бұрын
Did it cost you any money to do the agreement for sale.
@PaceMorby 2 жыл бұрын
Dee. I did an entire episode on Sunday Service, my podcast, on agreements for sale. Let me know if it covers all your questions. kzfaq.info/get/bejne/hp2fo69kqMzZZok.html
@SkylineR34EvoX 10 ай бұрын
Why don’t you write the agreement for sale from the start each time?
@donaldclifford5763 6 ай бұрын
It's easier to actually hold the deed, and is only used one in about 500 times.
@mikemazzuccorealtor Жыл бұрын
Why not do an agreement for sale off the bat?
@mosesneri5060 Жыл бұрын
Is anyone gonna answer ?
@huestifer Жыл бұрын
@@mosesneri5060 I have the same question. My guess is that it is a cleaner title if it is actually in the new person's name. Because if the old owner had a debt collector (IRS etc.) come after their assets they would take an interest in this house that was still in their name. Then you would have to prove that even though it was in their name they really don't have any interest in it anymore.
@TyJenkins2012 11 ай бұрын
Simplest answer is to have the deed recorded so you can claim tax depreciation.😇
@jeremyk6758 2 жыл бұрын
What are the names of these company's that do the DOS insurance??
@PaceMorby 2 жыл бұрын
Good question, Jeremy! Drop this question in the Facebook group. shor.by/Si74
@thrifttherunway Жыл бұрын
"There is no insurance company that offers this type of product. There was a guy on a podcast that referred to insurance, but the website actually called it assurance. It is more like a deed warranty."
@tictoc5443 Жыл бұрын
Can the seller still get finance if the loan is still in their name?
@donaldclifford5763 6 ай бұрын
Sometimes if that's an issue you can create an off-setting mortgage called a wrap around mortgage.
@p2pfilmcomp Жыл бұрын
You get the house, you just dont get the depreciation, correct?
@june06911 2 жыл бұрын
What company do you use for a "due clause on sale insurance"?
@PaceMorby 2 жыл бұрын
Great question, Benjamin. Drop this on the free Facebook group where you can find my students who use companies like this. shor.by/Si74 Join now and make a post!
@kristinmullen9311 Жыл бұрын
Lawyers in NC avoid these like the plague it seems
@donaldclifford5763 6 ай бұрын
Other states too. Need a real estate investment specialist.
@6BlackWings Жыл бұрын
Pretty sure "contract for deed" is just the legal definition of "rent to own" or "lease with purchase option".
@wallerlandventures Жыл бұрын
Contract for deed is how the veterans administration conveys all of their properties to vets after the loan is approved.
@donaldclifford5763 6 ай бұрын
The difference is the seller executes a warrantee deed to the buyer, but holds it for safe keeping instead of filing at the county records.
@UltimateBargains 2 жыл бұрын
If the lender threatens to call the loan, then I suggest threatening to stop payments. "Mr. Lender, I am unable to pay off this loan at this time. If you initiate a foreclosure action, then I will immediately stop payments." *Or* "Mr. Lender, the previous owner couldn't afford the upkeep of the property or make the payments anymore. So, I stepped-in to help. I'm fixing up the property and making the payments for them. If you call the loan due, then I'll immediately stop all repairs and stop all payments. Then you must go through the long foreclosure process to take back a vacant property when you could have allowed this performing loan to continue without interruption. Shall I stop the repairs and the payments, while you start the foreclosure, or will you allow me to continue the payments?"
@gixxerhoff7502 Жыл бұрын
If there is equity they stand to profit a lot . The more I dig into this, the more ways I see this going bad.
@TheCommercialFam 11 ай бұрын
@@gixxerhoff7502same
@brandisanders5412 10 ай бұрын
@@gixxerhoff7502what have you found?
@FLOODOFSINS Жыл бұрын
All this guy is doing is proving how underhanded, sneaky, and unethical he is. He's just trying to get away with as much shit as he can before he's caught with his pants down and then trying to apologize later. He's the worst kind of human being.
@seanm3226 11 ай бұрын
Explain. I’m curious. Thanks.
@donaldclifford5763 6 ай бұрын
Nothing in this video even remotely suggests that. The bank always gets paid. And there is no willful effort to conceal anything.
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