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LSDefine
Simple English definitions for legal terms
subject to
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A quick definition of subject to:
Subject to: When someone buys a property that already has a mortgage or loan on it, they may agree to take on the responsibility of making the payments on that loan. This means that they are buying the property "subject to" the existing debt. If they fail to make the payments, the original borrower is still responsible, but the lender can foreclose on the property and the new owner could lose it. This is different from "assuming" the loan, which requires approval from the lender.
A more thorough explanation:
Definition: Subject to refers to the acquisition of title to real property upon which there is an existing mortgage or deed of trust when the new owner agrees to take title with the responsibility to continue to make the payments on the promissory note secured by the mortgage or deed of trust.
For example, if John buys a house from Jane subject to the existing mortgage, John becomes the new owner of the property but is responsible for making the mortgage payments. If John fails to make the payments, the original debtor (Jane) will still be liable for the payment, but the holder of the mortgage or beneficiary of the deed of trust may foreclose and John could thus lose title.
This differs from the new title holder "assuming" the mortgage or deed of trust by a written transfer of the obligation. Such a transfer must be approved by the lender, since the new owner's credit may or may not be as strong as the original owner/borrower's.
Overall, subject to means that the new owner takes on the responsibility of paying the existing mortgage or deed of trust, but the original debtor is still liable if the new owner fails to make payments.