What is “subject to” when referring to taking title?

Jul 16, 2021

Kiritsis Law Group 212 922 0005

By: John Kiritsis, Esq., CPA, MBA, MS, JD, LL.M

Generally, taking title 'subject to' refers to situations where a person takes title to a property with a lien but doesn’t agree to be personally liable for the lien. If the lien holder forecloses and takes the property, then he can collect any money from the owner who took subject to.   To limit potential legal disputes, special care revolving the drafting, planning and negotiation over “subject to” clauses should occur prior to parties signing the dotted line. A new owner should not be surprised if the lien holder has inserted language to defeat and or dilute the 'subject to' clause, in order to go after the owner’s other assets. Similarly, ambiguous ‘subject to’ clause or behavior of the party(ies) outside the 4 corners of the contract may pursuade courts to strike the 'subject to' clause. Courts have taken divergent views on their treatment of subject to clauses, depending on the underlying facts, laws of the jurisdiction, and local legal customs.   In this author’s experience, a borrower is often at the mercy of the seller and the lender which means that it may be futile for a buyer, or the buyer’s attorney to push back too hard on the drafting language with regards to this topic. 

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