In a sub-2 deal, which is short for subject-to, a buyer takes over a property while the seller’s existing mortgage stays in place in the seller’s name. The buyer makes the payments. This can help a seller who owes more than they can easily pay and can give a buyer access to a low interest rate. It can also go badly if it is done wrong, so the details matter.

How it generally works

  • The buyer and seller sign a purchase contract and the deed transfers to the buyer
  • The existing loan stays in the seller’s name, and the buyer agrees to make the payments
  • The buyer takes over the property, its taxes, insurance and upkeep
  • Paperwork, such as authorizations to speak to the lender, is usually part of the deal

Why a seller might consider it

  • They need to sell quickly but have little or no equity
  • They want to stop foreclosure or protect their credit, though this is not guaranteed
  • They want to avoid agent commissions and repairs

The risks you need to understand

  • The due-on-sale clause. Most mortgages allow the lender to demand full payment when the property is transferred. Lenders do not always do this, but they can.
  • The loan stays in the seller’s name. If the buyer stops paying, the seller’s credit is affected.
  • Insurance and title. Both must be handled correctly or the buyer and seller can both lose.
  • Legal and licensing rules. Some situations bring extra requirements, so an experienced attorney is essential.

Get an attorney involved first

Never do a subject-to deal from a template. Use a Georgia real estate attorney who has handled these before. If you need one, Nil can introduce you to attorneys from our network who are paid at closing.

How we help

We help buyers and sellers understand whether a deal like this makes sense, ask the right questions and work with an attorney. We are not lenders and cannot promise any outcome. We work across Atlanta, Brookhaven, Decatur, Duluth, Ellenwood, Griffin, Hampton, Lawrenceville, Lilburn, Locust Grove, McDonough, Norcross, Snellville, Stockbridge, Stone Mountain and Tucker.

Get My Buyer Game Plan

Related: wrap-around mortgages and seller financing.

Nil Patel is a licensed Georgia real estate salesperson with Keller Williams Realty Atlanta Partners. This page is general information, not legal, tax or financial advice, and nothing here is a commitment to lend. Talk to a lender and a real estate attorney about your own situation. Creative financing structures can carry legal, tax and lender-consent risks. Talk with a real estate attorney before you proceed with a subject-to, wrap-around, lease option, lease purchase or seller-financed purchase.