Q. Two part Question on 2nd Mortgage with "Subject To" on the 1st. I've got a deal on tap with a 1st & 2nd. "Subject To" will work with the 1st Only. 1)How do I make sure they will pay the 2nd? And 2) what happens if I sell on lease/option and the optionee buys before the 2nd is paid off?


A. Get a Promissory Note from them to your company for the total amount of the 2nd. Secure it if you can - another property, vehicle, etc..


Have them make payments to you. I tell them that if they do not make payments to us, we will not make payments to the 2nd mortgage. If they are concerned about their credit, that should keep them motivated.


If they stop paying, call the Promissory Note due and start a collection against them including a judgment. You can decide if you want to keep paying the second to protect you interests OR stop paying it a maybe get it discounted.


If you sell the property and the second is paid off, the original sellers still owe your company the money because of the Promissory Note. Once again, if they stop paying, go after them.