What is unique about a "subject to" purchase agreement?

A "subject to" purchase agreement is distinctive because, in this type of arrangement, the buyer acquires the property while the existing mortgage remains in the seller's name. This means that the seller retains the mortgage liability even after the sale has taken place, and the buyer takes over the payments. This can be beneficial for buyers who may not qualify for a new mortgage or who wish to avoid traditional financing routes.

The nature of this agreement allows the buyer to benefit from potentially favorable terms of the seller's existing mortgage without officially assuming the loan; hence, the seller's credit remains tied to the mortgage. It’s crucial for buyers to understand that if payments are not made, the mortgage defaults could still impact the seller's credit history.

In contrast, other options present scenarios that do not align with the characteristics of a "subject to" agreement. For instance, while this type of purchase does not directly require the buyer to obtain a new mortgage, it doesn’t eliminate the existing mortgage either. Additionally, it does not guarantee financing as no new loan is provided to the buyer; rather, they rely on the seller's existing financing. Lastly, a "subject to" agreement is not limited solely to distressed properties; it can be used in a variety