“Subject to” is a phrase that is used to indicate that something is conditional or dependent on something else. It is often used in legal or business contexts to indicate that a particular action or agreement is contingent upon the fulfillment of certain conditions or requirements.
For example, a contract might include a clause stating that it is “subject to” the approval of a certain government agency, which means that the contract will not be considered valid or binding until the agency gives its approval. Similarly, a real estate purchase agreement might be “subject to” a successful home inspection, which means that the purchase will only go through if the inspection turns up no major problems with the property.
A subject to mortgage is a type of mortgage financing in which the borrower takes over the existing mortgage on a property, rather than obtaining a new mortgage from a lender. The borrower becomes responsible for making the mortgage payments, and the original lender retains the right to foreclose on the property if the borrower defaults on the mortgage.
Subject to mortgages are often used in real estate investment situations, where the borrower is interested in acquiring a property but does not have the cash or credit to obtain a new mortgage. By taking over the existing mortgage, the borrower can avoid the time and expense of applying for a new loan, and can potentially acquire the property at a lower price, since the seller may be more willing to accept a lower offer if the borrower is willing to assume the existing mortgage.
However, there are several risks associated with subject to mortgages. If the borrower defaults on the mortgage, the original lender can foreclose on the property, and the borrower may lose any equity they have built up in the property. Additionally, the borrower may be responsible for any back payments or penalties that have accrued on the mortgage, which can be significant if the property has been in default for an extended period of time. As a result, it is important for borrowers to carefully consider the risks and benefits of a subject to mortgage before entering into this type of arrangement.