A seller sold a house to a buyer allowing the buyer to take over the loan on a "subject to" basis. After 2 years, the buyer defaulted on the loan. Who would be liable to the lender for the note?

The Seller would be primarily liable

The Buyer would be primarily liable

Both buyer and seller would be primarily liable

Neither buyer or seller would be primarily liable

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20 July, 19:35

A seller sold a house to a buyer allowing the buyer to take over the loan on a "subject to" basis. After 2 years, the buyer defaulted on the loan. Who would be liable to the lender for the note?

The Seller would be primarily liable

The Buyer would be primarily liable

Both buyer and seller would be primarily liable

Neither buyer or seller would be primarily liable

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Answers (1)

Know the Answer?

Karli Cook · Answer 1

A. The seller would be primarily liable.

Explanation:

Subject to basis is a form of home buying options in real estate. It is a situation where the buyer takes over existing loan of a seller and make commitment to seller to continue repaying the loan to the lender.

Though the buyer will taken over the loan from the seller and make repayment to the lender, there is no legal obligation on buyer's part that makes him/her liable to the lender. The seller still remain liable despite the the taking over. So option A is right while B to D is wrong because it's only the seller that is primarily liable to the lender.