Quick answer: In a subject-to sale, you sign the deed over to a buyer, but your existing mortgage stays in your name. The buyer agrees to make the payments. It can help when you have little equity or need a fast exit. The main risks are the lender’s due-on-sale clause and harm to your credit if payments stop.
Most people sell a home the same way. A buyer gets a new loan, the old loan gets paid off at closing, and everyone moves on. A subject-to sale works differently. The old loan stays in place. This guide explains how it works, what can go wrong, and how to decide if it makes sense for you.
What Does “Subject To” Mean?
“Subject to” is short for “subject to the existing mortgage.” The buyer takes ownership of the home, but the loan you already have is not paid off. The deed moves to the buyer. The loan stays in your name.
The buyer then makes your monthly mortgage payments going forward. In most deals, the buyer also pays you some cash at closing, or pays off past due amounts if you are behind.
This is not the same as a loan assumption. In a formal assumption, the lender approves the new buyer and the buyer takes over the loan. In a subject-to sale, the lender is not asked to approve anything, and you stay on the hook for the debt.
How a Subject-To Sale Works, Step by Step
1. Review the loan
The buyer looks at your loan balance, interest rate, monthly payment, and whether you are current. You will usually sign an authorization so the buyer can talk to your lender about the account.
2. Agree on terms in writing
You and the buyer sign a purchase contract. It should spell out the price, any cash to you, who pays which costs, and exactly how the mortgage payments will be made.
3. Title work and closing
A title company searches for liens, unpaid taxes, and other problems. At closing, you sign the deed. The title company records it with the county. In Florida, documentary stamp tax is due on the deed. The rate is 70 cents per 100 dollars of consideration in most counties, and the Florida Department of Revenue counts an existing mortgage on the property as part of that consideration.
4. Payments after closing
The buyer starts making the monthly payments. Many deals use a third party loan servicing company so payments are tracked and both sides can see them.
The Due-On-Sale Clause and Its Real Risk
Most home loans include a due-on-sale clause. It says the lender can demand the full loan balance if you transfer the property without the lender’s consent.
A federal law called the Garn-St Germain Depository Institutions Act of 1982 lets lenders enforce these clauses. It does list some transfers that lenders cannot use as a reason to call a home loan due. Examples include a transfer to a spouse or children, a transfer after a divorce, a transfer to a relative after the borrower dies, and moving the home into certain living trusts. A sale to an investor is not on that list.
So what happens in real life? Lenders have the right to call the loan due. Whether a lender actually does it depends on the lender, the loan, and the situation. Enforcement varies. Some lenders may never act on a loan that is paid on time. Others may. Nobody can promise you which one you will get. If a lender does call the loan due, the full balance would need to be paid, usually by a refinance or a sale. If that cannot happen, foreclosure is possible.
Be careful of anyone who tells you there is “no risk” from the due-on-sale clause. There is a risk. The honest question is how the buyer plans to handle it if it happens.
How Subject-To Affects Your Credit and Liability
This is the part sellers need to understand most. When you sell subject to, you give up the house but you keep the debt.
- Your name stays on the loan. The lender still sees you as the borrower.
- Your credit report keeps showing the loan. On time payments help. Late payments hurt.
- It can affect new loans. A future lender may count this mortgage when it looks at your debt.
- Foreclosure risk is real. If payments stop, the lender can foreclose. A Florida law firm notes that a seller can still be named in a foreclosure case even after the home is sold.
This does not mean subject-to is always a bad idea. It means the buyer’s ability and willingness to keep paying matters a great deal. You should know who you are dealing with.
Protections to Ask For
If you are thinking about a subject-to sale, ask about these protections. A Florida real estate attorney can tell you which ones fit your situation.
- A licensed title company closing. This gives you a neutral party that checks title, records the deed, and handles funds.
- Third party loan servicing. A servicer collects and sends the payments and keeps records.
- Online access to the loan. Ask to keep the ability to check the account so you can see every payment.
- Insurance done right. The home should stay insured, and the lender’s insurance requirements must still be met.
- Clear written terms. The contract should say what happens if a payment is late or if the lender calls the loan due.
- Your own attorney. You can always hire a lawyer to review the papers before you sign.
- Extra care in foreclosure. If a foreclosure case has been filed and you will keep any interest in the home, such as a lease back or an option to buy it back, Florida Statute 501.1377 adds rules for the buyer, including a written contract and a right to cancel. See our guide for owners behind on the mortgage.
See cash as is, creative terms and a 1% listing side by side, in writing. It takes about a minute.
See my optionsSubject-To Compared With Other Options
| Factor | Subject-To Sale | Cash Sale | Loan Assumption |
|---|---|---|---|
| Is your loan paid off? | No | Yes | No, buyer takes it over |
| Is your name still on the loan? | Yes | No | Depends on lender release |
| Lender approval needed? | No | No | Yes |
| Due-on-sale risk | Yes | No | No |
| Speed | Often fast | Often fast | Often slow |
| Works with little equity? | Often | Hard | Sometimes |
When Subject-To Is Usually a Good Fit
- You owe close to what the home is worth, so a cash sale or listing would leave you with little or nothing after costs.
- You are behind on payments and want a way out before things get worse.
- You need to move soon and cannot wait for a listing to sell.
- You are comfortable that your name will stay on the loan for some time.
When Subject-To Is NOT a Fit
- You need your name off the loan soon. For example, if you plan to buy another home with a new mortgage right away.
- You have a lot of equity. A regular sale or a cash sale may put more money in your pocket.
- You do not trust the buyer. If you cannot verify who they are and how they will pay, walk away. Our guide on how to spot a bad home buyer lists simple checks.
- You do not fully understand the deal. If something is unclear, stop and get advice first.
- Your loan has unusual terms. Some loans, like certain government backed loans, have rules worth checking with an attorney. FHA and VA loans can sometimes be formally assumed instead, as our guide to selling with a low interest rate explains.
Taxes are another area to check. Selling a home can create a taxable gain, and the IRS has specific rules for a main home. Talk with a tax professional before you sign.
How HOMKEYS Approaches Subject-To Sales
HOMKEYS LLC buys homes across Florida. A subject-to purchase is one of several options we may offer. Others include a cash purchase as is, seller financing, and a 1% listing, where your home goes on the MLS through our licensed Florida real estate partner. We go over each option that fits your home so you can compare them side by side. Every closing goes through a licensed Florida title company.
Subject to qualification, property inspection, and transaction terms.
We cannot promise a price or a closing date before we review your home and your loan. We also cannot give legal or tax advice. We encourage you to have a Florida real estate attorney look over any subject-to agreement.
We work in many parts of the state, including Spring Hill, Port Charlotte, and Fort Myers. See the full list on our areas we buy page.
Want to see what your options look like? Share a few details about your property or call us at (305) 914-4191.
Frequently Asked Questions
Is a subject-to sale legal in Florida?
Yes. Selling a home subject to an existing mortgage is a legal transfer in Florida. But your loan papers likely have a due-on-sale clause, which lets the lender ask for full payment after a transfer. Legal and risk free are not the same thing. Have a Florida real estate attorney review the deal before you sign.
Will a subject-to sale hurt my credit?
It can. The loan stays in your name, so the payment history keeps showing on your credit report. If the buyer pays on time, your record stays clean. If the buyer pays late or stops, your score can drop and you could face foreclosure. That is why proof of payment and a third party servicer matter.
Can the lender call the loan due?
Yes. Under the federal Garn-St Germain Act, lenders may enforce a due-on-sale clause when a home is sold. The Act lists some exceptions, such as transfers to a spouse or child, but a sale to an investor is not one of them. No buyer can promise you the lender will never act.
Do I still owe the mortgage after a subject-to sale?
Yes. The deed moves to the buyer, but the promissory note you signed stays with you. You are still the borrower in the lender’s eyes. The buyer agrees to make the payments, but the lender can still look to you if the loan is not paid.
Who handles the closing in a subject-to sale with HOMKEYS?
Every HOMKEYS closing goes through a licensed Florida title company. The title company checks title, records the deed, and handles the money at closing. You are also free to have your own attorney review every document before you sign.
Not legal advice. This guide is general information about Florida home sales. Laws change and every situation is different. Talk with a Florida attorney, tax professional, or insurance professional about your own case before you sign anything.
Tell us about the house. We will show you cash, terms and listing side by side, in writing. Subject to qualification, property inspection, and transaction terms.
See my optionsCall (305) 914-4191Sources
- https://www.law.cornell.edu/uscode/text/12/1701j-3
- https://floridarevenue.com/Forms_library/current/gt800014.pdf
- https://www.theorlandolawgroup.com/blog/all/subject-to-transactions-risks-sellers-need-to-know/
- https://marinatitle.com/subject-to-transactions-pros-cons-and-title-considerations/
- https://www.irs.gov/taxtopics/tc701
- https://www.flsenate.gov/Laws/Statutes/2025/501.1377
⌂ Equal Housing Opportunity. HOMKEYS LLC does not give legal or tax advice. Talk with a Florida real estate attorney or tax professional about your situation.