A subject-to sale moves the title. It does not move the loan.

What actually changes at closing

In a subject-to purchase, the seller signs a deed conveying the property to the buyer. The existing mortgage is not paid off. It stays where it is, attached to the property, and the buyer takes title subject to that lien. The loan documents are untouched. The lender’s records still show the original borrower.

So three things move: possession, ownership on the deed, and responsibility for making the payment in practice. One thing does not move: the legal obligation to repay the debt.

That gap is the entire subject of this page. It is not a technicality, and any buyer who treats it as one is telling you something about how they will handle the rest of the transaction.

What stays with the seller

Unless the lender approves an assumption and delivers a written release of liability, the seller remains the borrower. In practice that means:

• The loan keeps reporting on the seller’s credit. On-time payments help. Late payments do not distinguish between who signed the deed and who signed the note.
• A future lender will usually count the payment against the seller when qualifying them for a new mortgage, unless the seller can document that someone else has made the payments for long enough to satisfy that lender’s rules.
• A default is the seller’s default. If the buyer stops paying, the servicer pursues the borrower on the note.
• Escrow changes flow through to the seller’s obligation. A tax reassessment or an insurance increase raises the payment on a loan that is still in the seller’s name.

None of that makes a subject-to sale wrong. It makes it a transaction that has to be documented, monitored, and entered into on purpose.

Why sellers still choose it

The structure exists because some situations do not have a clean answer. A seller with an unworkable payment and no equity cannot list and net anything after commissions and closing costs. A seller who has already moved and is carrying two housing payments needs the bleeding to stop faster than a retail listing can manage. A seller with a low fixed rate on a house that would not appraise for the payoff has a loan worth more than the equity.

In those cases the comparison is not “subject-to versus a great retail sale.” It is “subject-to versus continuing to carry it.” That comparison is worth running honestly, with real numbers, which is why every review here starts with a payoff quote rather than a pitch.

The clauses that separate a real deal from a bad one

A buyer who resists putting these in writing is not offering a subject-to purchase. They are offering a handshake with a deed attached.

The due-on-sale question

Most mortgages contain a due-on-sale clause allowing the lender to demand full payoff after certain transfers. Federal law at 12 U.S.C. § 1701j-3 generally permits lenders to enforce those clauses, subject to specific listed exceptions. Nobody can privately guarantee that a lender will not notice a transfer or will not act on it.

Any buyer who tells you the clause “never gets enforced” is making a prediction about someone else’s business decision and asking you to bet your credit on it. The honest position is that the risk is real, it is disclosed in writing, and the contract says what happens if the lender does act. The full explanation is here.

State law is not a footnote

Deeds, disclosures, executory-contract rules, foreclosure procedure, and seller-financing requirements vary by state and sometimes by transaction type. Texas, for example, has specific statutory provisions in Chapter 5 of the Property Code that affect conveyances of residential property encumbered by a lien and contracts that function as executory conveyances.

This page is general education, not legal advice for your property. A qualifying transaction should be papered and closed through a title company or attorney appropriate to the state, and the seller should have their own independent review.

Common questions