What is a subject-to real estate deal?

A subject-to deal is one where a buyer takes ownership of your house 'subject to' your existing mortgage — the deed transfers to them, but the loan stays in your name. They agree to make your mortgage payments. It is not a normal sale (your loan isn't paid off) and not a loan assumption (the lender hasn't released you). You transfer the house but keep the debt.

Subject-to is heavily marketed to distressed sellers right now. Understanding how it actually works — not how it's pitched — is the most important thing you can do before any conversation about it.

What happens in a subject-to deal

You sign a deed transferring your property to the buyer. Your mortgage is not paid off at closing — it stays open in your name. The buyer agrees to make your monthly mortgage payments going forward. They own the house; you're still on the loan.

The risk you're taking

If the buyer stops making payments — next month or three years from now — it's your credit that's damaged. It's your name on the foreclosure notice. You no longer own the house, but you're still legally responsible for the debt it's securing.

You've trusted a person you recently met to make your mortgage payments reliably for years, with your credit and the possibility of foreclosure on the line if they don't. The buyer chose a structure specifically because they didn't want to get their own financing. Think about what that means for their financial position.

The due-on-sale clause

Most mortgages let the lender demand the full balance immediately if the property is transferred without their consent — this is the due-on-sale clause. A subject-to transfer does exactly that, so the deal relies on the lender not noticing or not acting. Lenders have recently had more financial incentive to enforce this clause.

When subject-to might be considered

It can make sense in a very narrow case: little equity, urgent need to stop payments, real written safeguards, and your own attorney's independent review of the contract. Even then, you're accepting real risk in exchange for a specific benefit. The legitimate version is transparent about this tradeoff and includes contractual protections — a performance guarantee or a formal default-and-recapture provision.

The predatory version glosses over the retained liability entirely. "We'll take over your payments" can sound like relief while quietly keeping you on the hook for years.