Subject-To Disclosure Document Template
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Source: https://metrodealreport.com/templates/subject-to-disclosure
A starting-point disclosure document for subject-to transactions, where the seller signs an explicit acknowledgment that they understand the structure, the risks, and their continued exposure on the underlying mortgage. Critical for legal protection and good ethics.

SUBJECT-TO TRANSACTION DISCLOSURE STATEMENT

This disclosure is provided to you, the Seller of the property at:
[PROPERTY ADDRESS], as part of a "Subject-To" real estate transaction
proposed by [BUYER NAME]. Please read this document carefully and
ask any questions before signing.

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1. WHAT "SUBJECT-TO" MEANS
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In a Subject-To transaction:
  • You transfer ownership of the Property to the Buyer (or to a trust
    the Buyer controls).
  • Your existing mortgage loan REMAINS in place — it is NOT paid off
    at closing.
  • The Buyer takes responsibility for making the monthly mortgage
    payments going forward.
  • Your name will remain on the mortgage loan and on your credit
    report until the loan is paid off, refinanced, or otherwise
    satisfied — which may take years.

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2. KEY RISKS YOU ARE TAKING
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DUE-ON-SALE CLAUSE: Almost every mortgage contains a "due-on-sale"
clause giving the lender the right to demand the entire loan balance
be paid in full when the property is transferred. While lenders do
not always exercise this right, it is a real legal risk. If the
lender does call the loan, the Buyer will need to refinance or
otherwise satisfy the loan — but you, as the original borrower,
remain legally responsible to the lender if the Buyer fails to pay.

YOUR CREDIT IS AT RISK: Because your name remains on the mortgage,
the Buyer's payment performance — on-time or late — will continue
to affect YOUR credit score for as long as the loan exists. A late
or missed payment by the Buyer can damage your credit, even though
you no longer own the property.

POTENTIAL CONTINUED LIABILITY: If the Buyer fails to pay the
mortgage, or if the lender forecloses, you could face:
  • Foreclosure on your credit history
  • Potential deficiency judgment if the lender's recovery falls
    short of the loan balance
  • Difficulty qualifying for future mortgages (the existing loan
    counts in your debt-to-income calculations)

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3. WHAT THE BUYER COMMITS TO
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The Buyer agrees to:
  • Make all monthly mortgage payments on time, by automatic
    withdrawal where possible
  • Provide you monthly proof of payment within 5 business days
    of each due date
  • Maintain property insurance with the original lender named as
    mortgagee
  • Notify you within 48 hours if the Buyer becomes aware of any
    lender communication indicating the loan may be called
  • Use commercially reasonable efforts to refinance, pay off, or
    formally assume the loan within ___ years

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4. YOUR RIGHTS
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You have the right to:
  • Consult independent legal counsel before signing this disclosure
    or the related purchase agreement. The Buyer STRONGLY ENCOURAGES
    you to do so at the Buyer's expense up to $_______.
  • Cancel this transaction at any time before closing.
  • Receive a copy of every monthly mortgage statement going forward.
  • Be notified of any lender contact regarding the loan.

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5. ACKNOWLEDGMENT BY SELLER
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By signing below, you acknowledge:
  □ You have read and understand this disclosure
  □ You understand the due-on-sale risk and that your name remains
    on the loan
  □ You understand your credit may be affected by the Buyer's
    payment performance
  □ You have been advised to consult independent legal counsel
  □ You are entering this transaction voluntarily and without
    coercion

Seller signature:                  ____________________________
Printed name:                      ____________________________
Date:                              ____________________________

Witness or Notary signature:       ____________________________
Date:                              ____________________________

Buyer signature:                   ____________________________
Printed name:                      ____________________________
Date:                              ____________________________

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WARNINGS:
  - This is a STARTING POINT. State law on subject-to disclosure varies. Always have a real-estate attorney experienced in subject-to transactions adapt this document to your state.
  - Notarized or witnessed signatures are strongly recommended even where not legally required.
  - Give the seller TIME to read and ask questions. Sub-to deals signed under pressure are the ones that get unwound by courts.
  - Keep clear records of every signature, every disclosure, and every monthly payment. Documentation is the difference between a clean operation and a lawsuit.

This template is provided as-is, for educational purposes only.
Always have a licensed attorney in your state adapt before use.

© Metro Deal Report — https://metrodealreport.com