The Subject-to Process
Step 1: We Offer & You Accept
You tell us about your home and loan. We calculate the payoff (principal + interest + fees). We write an offer for your equity (which is $0 or negative if you're underwater). You accept. We don't ask the bank's permission yet.
Step 2: Title Commitment & Walkthrough
We order a title report and walk the property. Title shows us who owns it and what liens are on it (mortgage, HOA, property tax, etc.). We make sure the title is clean enough to transfer.
Step 3: You Sign the Deed
You sign a warranty deed (or quitclaim, depending on title insurance) transferring ownership to us. You sign an authorization allowing us to make loan payments on your behalf. This is critical: you're giving us the right to manage the loan, but your name stays on the promissory note.
Step 4: We File the Deed & Record the Authorization
We record the deed at the county recorder (public record shows you no longer own it). We keep the authorization private, registered only with the lender or in our records.
Step 5: You're Out; We Take Over Payments
As of the recording date, you no longer own the house. We make all loan payments going forward. You should not make payments—doing so creates confusion and liability.
Step 6: We Manage the Loan (or Refinance)
We start making payments. We may contact the lender to set up payment instructions in our name (not always possible). Some lenders don't care who pays as long as the payment comes. Others invoke the due-on-sale clause and demand payoff.
If they demand payoff, we refinance or sell the property. That's why timing and our cash flow matter.
Your Liability: The Due-on-Sale Clause
Important: Your promissory note almost certainly has a "due-on-sale" clause. It says "if the property changes ownership without lender approval, the lender can demand immediate payoff of the entire loan."
In a subject-to deal, we take over the deed without telling the lender. This technically triggers the due-on-sale clause. The lender can demand payoff. Here's what usually happens:
- Lender doesn't notice — payment keeps coming, lender is happy. Years pass.
- Lender notices via a credit check or title search — they call you or send a letter demanding payoff. You tell them to contact us (the new owner). We pay off or refinance.
- Lender accelerates the loan — demands payoff in 30 days. If we can't pay, foreclosure happens. You're liable for any deficiency.
This is why you must have an attorney review the promissory note. Some notes have negotiable due-on-sale clauses. Some lenders are more aggressive than others. Las Vegas is a non-recourse state (for purchase-money mortgages), but that depends on when and how the loan was originated.
Your Name on the Note: What It Means
Even though the deed is in our name, the promissory note still has your name on it. This means:
- The lender can sue you if we stop paying. If we default, they can get a judgment against you and garnish your wages or bank account.
- Credit bureaus may report it to you. If the loan is late or delinquent, your credit takes a hit, not just ours (or both).
- You're liable for any deficiency after foreclosure. If we stop paying and the house sells for $250,000 but the loan is $350,000, the lender can pursue you for the $100,000 difference (in some states; Nevada is non-recourse for some loans, but not all).
Protecting Yourself
Require that we post a bond, show proof of liquidity, or agree to a payoff timeline. Don't just sign the deed and hope. Work with an attorney to draft a limited recourse clause or an indemnification agreement.
What Gets Recorded and What Does Not
The deed transfers and that is a public record. The mortgage does not move, is not assumed, and your lender is not asked for consent. Understanding that split is the whole ballgame — the negative-equity explainer gives the background if the terminology is new.
The Due-On-Sale Clause, Plainly
Your mortgage contains a clause letting the lender demand repayment in full if the property is sold without consent. It is a right they may exercise, not an automatic trigger, and in practice servicers are mostly concerned with being paid on schedule. We are not going to promise you it can never come up, because we cannot control it. We will put it in writing so you decide with your eyes open.
How the Payment Obligation Is Documented
The purchase agreement states who pays, when, and what happens if they do not. You are entitled to have your own attorney review how that is secured and what recourse you would have. A buyer unwilling to put it in writing should not be buying your house.
Your Exposure If We Stopped Paying
It would be yours, because the note stays in your name. That is the central risk and pretending otherwise would be dishonest. It is also why the credit page is written as a two-sided document rather than a sales pitch, and why the FAQ answers this question directly.
When We Would Steer You Elsewhere
If a clean break from the debt matters more to you than speed or credit, a short sale is the better instrument and we will say so. Our process is built to reach that conclusion early rather than after a month of wasted time.