Tipton Law Firm, PLLC

06/28/2024

I can't believe I HAVE to keep clarifying this for everyone out there doing sub2/wrap but someone is teaching this incorrectly and y'all are RUNNING with it....

A Subject To is when you take the property subject to the existing financing. You CAN have a Note/Deed of Trust to Secure Performance or Assumption - these docs do NOT make it a wraparound.

A Wraparound is where the Seller finances a portion of the sales price equal to or more than the first lien existing note(or all current notes). It is considered a mirror wrap when the terms are the exact same as the first lien. It is still a wrap if it's a mirror wrap - a mirror wrap is not a subject to. The buyer is not paying the first line note in a wrap, they are paying the note that has been financed to them by the seller - whether it's a mirror wrap or regular wrap.

If you're doing these deals you have to understand these differences in terminology. I just had a TC (yes...a TC) tell me that they wanted both a note/mortage/deed of trust from the buyer to seller (for what? idk because there was no seller financing addendum or anything being financed by the seller) and A Note and Deed of Trust to Secure Performance on a Sub2, and then simultaneously said that the transaction is a wrap (which was news to me because again, there is no seller finance terms, etc. and they've provided only sub2 docs this entire time). 🤦🏻‍♀️

Moral of the story is that this happens a lot -- and mostly from TCs who don't know their terminology, but also from investors who put these terms in contracts but intend something else.

Please learn the differences and nuances in these transactions and what they are and imply if you're going to be handling these deals.

03/12/2024

“If I sell my property to you Sub2, can I get another loan later on?”

I see this question all the time, and the correct answer to this question is generally, yes, you can get another loan.

In most scenarios, 6 to 12 months after selling the property, with proof that the property has been sold and somebody else is paying the mortgage, lenders will remove that debt from the sellers debt to income ratio which will allow them to get a new loan. Now, every lender and their requirements are different so there’s no straight answer to what is required to prove this or that their new lender will always accept this and remove the debt.

Other considerations are whether the seller is trying to get additional VA financing. Their entitlement will always be taken up by that loan until it is paid off. So if they do not have additional or bonus entitlement, they may not be able to get additional financing. If they are trying to buy in the same city, and the loan wasn’t officially assumed and approved by the VA, they may not be able to get additional VA financing. 

Also, if a seller had extremely bad credit, at the time you took over the property, 6 to 12 months may not be enough to get that credit right and when they go to get a new loan, they will likely still be denied and they could blame it on the fact that they sold sub to and be upset. This is something to also remind them that their credit Hass to be good and all the factors have to be there for them to get additional financing.

Overall, you should never promise a seller that they can get additional financing, but you can let them know that in most scenarios it’s likely that they can, but they do have to work to find the right lender who will accept their current position and status of credit. 

02/27/2024

Hi. Just want to clarify something that I keep seeing:

A land trust does not automatically keep a lender from calling the note due in a Sub2 or have 100% protection. This is a FACT.

A lender does not call a note due just because you transferred title to an LLC or not call it because you transferred title to a trust. In order for the lender to even consider calling the note, they have to actually see that title has been transferred in the first place. This is highly unlikely in 99% of scenarios. Unless they are checking title or somebody tells them they are unlikely to see.

Just because the property is in a trust does not mean the lender cannot still call the note. The reason lenders can’t call notes due when in a trust is because the trust falls under the exception from the Garn St Germain act that says that a lender cannot call a note if a property is transferred to a trust for estate planning purposes. So, technically land trusts are not always considered estate planning trusts, and generally if the beneficiary of the trust is not their borrower, they won’t like that and could still call under their discretion. Hence why they are not 100% effective.

So - anyone that tells you that you have to take title a specific way in order to keep the lender from calling the note is wrong. Trusts can help and they can be an additional layer of protection, but I have closed thousands of these transactions with people taking under both LLCs and trusts and the likelihood of the note being called is no different in my experience.

All this to say - make your decision based on your own risk adversity. The note being called is an inherent risk of a subject to, and if you are deathly afraid of it, you probably shouldn’t be doing these deals.

Party on my friends ✌🏼🤟🏼🤙🏼

10/13/2022

If you’re not doing creative finance deals, what are you doing??

I created a course to help investors like you learn how to do Subject To Transactions: From Contract to Close 🤯 this course is for anyone and everyone wanting learn 👩🏻‍💼

Check it out 👇🏼👇🏼

In this Subject To course you will learn how to acquire real estate with no money down, no credit checks and no banks! I will teach you how to source and lock down Subject To Transactions from contract to close.

09/29/2022

Closing Sub2s ALL DAY today 👏🏼😮‍💨

09/23/2022

🏡 The market is changing folks and we are in FULL SWING with subject to transactions!

If you’re not locking down deals with creative financing, you need to start 👀

👩🏻‍💼If you’d like to learn about subject to transactions, I can teach you!

My online course, Subject To Transactions: From Contract to Close is a deep dive in to the world of Sub2s and will teach you how to find, contract, and close them with ease 🤩

I know I have been hinting at this course for a while and I had expected to have it out a little bit quicker, but I’m in the finishing touches stage and should have it out by October 1st 😱

📩DM me for more info

09/20/2022

Its back to the grind after an eventful weekend 💪🏼

We’ve got you covered from contract to close, whether it’s:

☑️Subject To
☑️Wraparound
☑️Owner Finance
☑️Wholesale/Cash Sale
☑️Title Issues

09/17/2022

Breaking out the red carpet for WholesalingLive💰Mike and Charles put together a great event this weekend and it’s not even over 🍾🤑

09/07/2022

It’s a always great to see happy new home owners made possible by owner financing🏡

We’ve got you covered from contract to close 📝

09/04/2022

TLF will be closed tomorrow, Monday September 6, in observance of Labor Day ✨

We will resume regular business hours on Super Tuesday!