What Should I Do If My Seller Receives a “Subject To” Offer?
QUESTION: I read your previous Q&A advising that sellers should generally avoid “subject to” transactions and wraparound mortgages. Right now, I am receiving offers from investors on my listings proposing these types of arrangements now more than ever. Are they still risky? If they are risky, do I still have to present the offer to my seller? What should I tell my seller if the offer includes custom documents I don’t know how to interpret?
ANSWER: Yes, you should still present the offer. A broker’s concerns about a proposed transaction do not relieve the broker of the duty to deliver an offer to the seller. If your seller insists on proceeding with one of these types of offers, you should strongly recommend they seek legal counsel in writing before they sign any contract.
As we discussed in our previous Q&A here, a “subject to” transaction generally involves the buyer taking title to the property while the seller’s existing loan remains in the seller’s name. The buyer may agree to make the seller’s mortgage payments, but the seller remains liable to the lender. A wraparound mortgage presents similar concerns because the seller’s original loan also remains in place.
Both of these types of transactions create significant risks for sellers, including the possibility that the existing lender could accelerate the loan if the transfer violates the terms of the seller’s loan agreement.
That does not mean a broker should decide for the seller whether to accept or reject the offer. Instead, a broker should timely present the offer, point out any clear material terms, and make sure the seller understands that the proposed transaction differs significantly from a traditional sale. The ultimate decision how to respond to the offer belongs to the seller.
Any time a transaction involves custom contracts, addenda, financing terms, powers of attorney, or other documents prepared by an investor or an investor’s attorney, the broker should advise the client to speak with their own attorney. A broker should not attempt to interpret the terms, advise the seller regarding their legal effect, or suggest revisions to make the transaction workable. The seller should also discuss with their attorney whether and how to communicate with their current lender regarding the proposed transaction.
Finally, brokers should be particularly careful not to allow statements made by an investor or wholesaler, or contained in their marketing materials, to substitute for independent legal advice. An investor may explain how they believe the transaction will work, but the seller should have their own attorney evaluate the risks and determine whether the documents adequately protect the seller. Ultimately, a broker’s job is to communicate the offer, help the seller understand the transaction within the limits of the broker’s expertise, and recognize when the seller needs legal advice before proceeding.
Release Date: 8/27/2026
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