In the context of real estate financing, what does the term "subject to" imply?

In real estate financing, the term "subject to" indicates that the buyer purchases a property without formally assuming the existing loan. The buyer will take control of the property while the loan remains in the seller's name. This means the buyer benefits from the property and is responsible for the mortgage payments, but the original borrower (the seller) still holds the liability to the lender.

This arrangement can be advantageous for buyers who may not qualify for traditional financing or want to avoid the closing costs associated with negotiating a new loan. It often allows the buyer to take advantage of existing mortgage terms, which can be beneficial if the current interest rates are lower than the market average. Importantly, the lender may retain the right to call the loan due if they find out the property has been transferred, but as long as that is not triggered, the buyer operates under the "subject to" agreement effectively.

The other options involve scenarios where the buyer either assumes full responsibility for the existing loan, pays off the loan immediately, or negotiates new financing terms—all of which do not accurately capture the essence of a "subject to" transaction.