What is meant by 'subject to' in terms of mortgage transfers?

The term 'subject to' in terms of mortgage transfers means that the original mortgagor remains liable for the debt. When a property is sold 'subject to' an existing mortgage, the new buyer takes over the property and its mortgage payments but does so without formally assuming the mortgage. This arrangement allows the buyer to take possession of the property while the original borrower retains ultimate financial responsibility for the mortgage debt.

If the buyer fails to make the payments, the lender can still pursue the original mortgagor for the debt. This situation distinguishes 'subject to' transfers from those scenarios where a buyer formally assumes the mortgage, which typically releases the original mortgagor from liability. Understanding this distinction is crucial for both buyers and sellers to grasp the potential implications of such an arrangement on financial responsibility and liability.