In a high-interest environment, savvy investors are exploring creative ways to unlock opportunity—especially in the U.S. market. One such strategy is a Subject-To (“Subto”) deal.

It’s fast. It’s unconventional. And it’s not for everyone.

But knowing how it works could give you a serious edge.

At SHARE, we help everyday investors tap into U.S. real estate with institutional-grade tools and boots-on-the-ground support. Our network of specialized partners—spanning title, insurance, and closing—makes even complex transactions like Subto seamless. While these deals aren’t for every investor, they’re a powerful concept to understand as affordability tightens and sellers seek flexible exits.

Let’s break it down.

What Is a Subject-To Deal?

A Subto deal allows you to buy a property “subject to” the seller’s existing mortgage. The loan stays in the seller’s name—but you (the buyer) take ownership of the property and agree to continue making the mortgage payments.

Unlike a mortgage assumption, the lender is not notified, and you’re not officially on the loan. You gain the rights to the property—but not the direct obligation to the lender.

Think of it like this:

The seller walks away from making payments on their mortgage.

You step in instead, keeping their mortgage intact by paying on their behalf.

Everyone skips the bank.

Subject-To vs. Mortgage Assumption

Why Would Anyone Do This?

🏡 A Case Study: Taking Over a 3.88% Mortgage in Texas

One of SHARE’s clients used a Subto and seller-leaseback deal to acquire a turnkey 3-bed, 2-bath single-family rental in Houston, Texas.

Instead of applying for a high-interest loan, he stepped into an existing mortgage with a low fixed rate—giving him instant leverage and immediate rental income.

3 Bedroom | 2 Bath | Built in 2011
Location: Houston, Texas
Sourcing: Off-market wholesaler
Purchase Price: $243,952
Mortgage Balance (Taken Over): $153,689
Interest Rate: 3.88%
Loan Maturity: 2062
Cash Paid to Seller: $90,190
Monthly Rent Collected: $2,200
Lease Term: 24 months (Seller-Leaseback)
Current Estimated Value: $275,000

>>> Property Details <<<

Few important details about this deal:

1. A leaseback agreement to the seller means that there is no vacancy period. Plus, a prepayment of $12,000 was collected from the seller upfront.
2. The original mortgage that he took over does not mature until July 1, 2062. That means:

• SHARE’s client now holds a 3.88% fixed-rate mortgage for another 37 years (as of 2025)—something most investors can only dream of.
• The payment remains stable for the long term, even as rents rise and inflation erodes real-dollar costs.
• Each mortgage payment steadily builds equity, with no risk of rate resets like you’d see in Canadian 5-year terms.

This kind of long-term fixed financing is nearly impossible to access today unless you take over an existing loan, and that's exactly what this Subto deal enabled.

In short: our client locked in a rare, inflation-proof financing structure that’s designed to generate stable cash flow, long-term equity, and strong returns without the volatility of traditional financing.

So, What’s the Catch?

Subto deals aren’t risk-free—and they aren’t something you should try to DIY. But with the right legal structure and due diligence, they can be a powerful tool for unlocking opportunity in today’s high-interest market. Here’s what to know:

1. Due-on-Sale Clause

The Risk:

Most conventional mortgages include a due-on-sale clause—meaning the lender has the right to demand full repayment if the property title is transferred to a new owner. While this clause is rarely enforced when payments remain current, the risk exists.

How SHARE mitigates this:

• We underwrite every deal as if the due-on-sale clause were enforced. That means the numbers need to work even if you had to refinance, sell, or restructure the deal.
• If the clause is triggered, you’ll have multiple exit options:
  • refinance the property,
  • sell it,
  • or create a rent-to-own agreement.
• We work with specialists who are experienced in structuring Subto transactions to reduce the visibility of title transfers, where appropriate.
  

2. Legal Complexity

The Risk:

Subject-To deals require significant legal structuring—far more than a standard purchase agreement. A typical Subto may involve multiple layered contracts to protect both the buyer and seller, maintain lender compliance, and ensure proper ownership transfer.

While lease-back agreements are relatively straightforward, the real complexity lies in the core Subject-To documents and the legal architecture behind them.

🚨 Without proper execution, deals can collapse—or worse, expose you to title issues, lender acceleration, or legal liability.

Examples of documents often involved:

• Wraparound mortgage agreements

• Performance deeds of trust

• Seller disclosure forms specific to Subto

• Escrow servicing arrangements

• Limited power of attorney

• Promissory notes

• Leaseback contracts (when applicable)

• Insurance addendums and lender notice waivers

How SHARE mitigates this:

We work exclusively with specialized closing attorneys, title partners, and escrow servicers who focus on creative finance and Subject-To structures. Every Subto deal SHARE supports is executed with state-compliant, airtight legal documentation, tailored to the deal’s structure and market.

You don’t need to vet professionals or guess what’s required—we’ve already built the legal team to do it right.

3. Seller's Credit Is On The Line

The Risk:

Because the mortgage stays in the seller’s name, their credit is at risk if the buyer fails to make timely payments. That creates a layer of ethical responsibility and potential exposure for the seller.

How SHARE mitigates this:

• We act as an intermediary and property manager in every deal we support, ensuring payments are automated, transparent, and professionally tracked.

• SHARE only works with qualified investors and institutional-grade service providers to reduce the risk of mismanagement.

• Our screening process ensures clients understand the weight of this responsibility—and have the financial readiness to carry it.

4. State Level Variation

The Risk: 

While Subto deals are legal across the U.S., state-level enforcement of due-on-sale clauses, recording policies, and insurance treatment can vary. Some states are simply easier to navigate than others.

How SHARE mitigates this: 

• We vet every Subto opportunity at the state level to ensure feasibility and landlord protections.

• Our due diligence includes title company cooperation, insurability, legal precedent, and historical lender behavior in each state.

• Where appropriate, we structure these deals using leaseback arrangements—where the seller remains in the home as a tenant after closing. This strategy minimizes red flags that might trigger lender scrutiny, reduces the risk of early vacancy, and provides immediate cash flow to the buyer.

You’ll never be left guessing if a deal is too risky to close. If we support it, it’s because we’ve already done the work to de-risk it for you.

Types of Subject-To Deals

There are a few variations:

✅ Cash-to-Loan Subto: You pay the seller the equity difference and take over the mortgage.
SHARE focuses exclusively on cash-to-loan Subto deals because they’re simpler to execute, easier to structure legally, and create cleaner outcomes for both buyer and seller.

Subto with Seller Carryback: If the seller has more equity than you can cover upfront, they “carry back” a second loan that you repay over time.

Wraparound Subto: You create a new, larger loan that "wraps around" the seller's existing mortgage with your payments covering both. 

Is This Strategy Right for You?

If you’re early in your investing journey, probably not. Subto deals require:

• Legal sophistication

• Trust between buyer and seller

• An appetite for risk

• Access to additional capital

But they’re worth knowing about—especially if you’re growing your portfolio, exploring off-market deals, or aiming to maximize leverage in a tough borrowing environment.

Final Thoughts

In real estate, strategy equals survival—especially in uncertain times. Subto deals aren’t mainstream, but they’re a reminder that creativity can unlock value when conventional doors are closed.

Even if you never do a Subto deal, knowing how it works helps you become a more informed, flexible, and opportunity-ready investor.

Want to explore ways to invest in U.S. real estate with low rates and institutional support?

📆 Let’s talk about your goals—and the best way to reach them.