Isn’t a subject to purchase illegal since the bank loan is not being paid off?

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No, it is not illegal to purchase an asset subject to someone else’s financing. The seller signed an agreement with the lender and you are not a party to that agreement unless you signed some agreement with the seller’s bank concerning the mortgage note. The fact that you made an offer to purchase the seller’s asset subject to the existing financing that is already in place is not an illegal action on your part.

It also is not an illegal action on the seller’s part. Seller’s have the right to sell their property. If they transfer title and don’t pay the loan off, the lender theoretically could call the loan due and ask that the loans be paid off in full. Not one lender in one hundred will do this if one in one thousand. Lenders don’t actually call loans due where someone is making the payments. They have many loans not making the payments at all that keep them too busy to even think about the situation where someone else is making another person’s mortgage payments.

Banks have a lot of loans and even the loans where someone stops making the payments can take months before the loan actually goes into foreclosure. So, the fact that you are making someone else’s mortgage payment on their loan is not going to be a problem.

It is an imaginary fear that many investors have and also some seller’s have. If the bank decides to call the loan due, then just replace the loan. This is more work but most lenders are going to be too busy to complain about someone else paying their borrower’s mortgage payment.

A good starting point would be to get more education. If you would like to learn more about investing and other related topics, just go to www.benjaminzmiller.com If you would like to meet more investors and lenders, you also can go to the free Sunday weekly meeting held on Zoom for Benjamin Z Miller’s Investor Networking Group.

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I hope that helps and good luck with your investing!

Benjamin Z Miller
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