Tulsa, OK asked in Real Estate Law for Kansas

Q: In Kansas is it possible to acquire a house "subject to" existing financing?

In other words, can they sign the deed to me, while the financing remains in their name, but i make the payments?

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1 Lawyer Answer
Scott C. Stockwell
Scott C. Stockwell
  • Lawrence, KS
  • Licensed in Kansas

A: Bank mortgagees typically have "due on sale" clauses that provide that mortgage debt accelerates upon the transfer of the property. Sometimes lenders ignore transfers and continue to accept payments. However, the purchaser is taking a risk. The purchaser could make payments that are not applied to the mortgage and the resulting default and foreclosure cause the purchaser to lose some or all of the investment. The mortgage payment may pay the insurance, but the insured is the seller, not the purchaser. The purchaser will not be able to obtain information from the lender regarding the loan or its status (e.g., the amount paid, amount owing). The purchaser may put down an earnest money deposit or invest in improvements in the property, only to lose them later. A bank or title company providing the balance of financing may not accept the arrangement.

A more typical arrangement for such a purchase is a "Contract for Deed." The payments are made to a title company that insures loan payments are made. The title company holds the deed in escrow until the price is fully paid. You should consult an attorney regarding your options.

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