What does "Subject to" mean in real estate transactions?

In real estate transactions, the term "Subject to" indicates that the buyer is aware of existing liens or encumbrances on the property but does not assume personal responsibility for them. This means that while the buyer acknowledges the presence of these liens, they acquire the property “subject to” those existing terms and obligations. The original seller remains ultimately responsible for the debt or lien, and the buyer's investment is based on the property itself, not the debts tied to it.

This concept is crucial for buyers and investors because it allows them to purchase properties that may have outstanding debts without immediately having to pay those debts off. It often applies in situations such as taking over a mortgage where the lender may not require formal assumption of that mortgage by the new buyer. Understanding this concept helps buyers gauge their financial responsibility when stepping into a property with existing financial obligations.