While you may feel clever with your posts, they are not helpful. Please stop posting information when you clearly do not understand what you are talking about.
The lease agreement may have been created and signed by the original owner(s), but it grants specific use rights to the tenants that are not voided due to a transfer in ownership. By taking ownership, Lunk-NC will have to honor the agreement. In order to sell the house as vacant or to rent to other tenants, it would require a notice to vacate from a local judge or magistrate (depending on who has authority in that jurisdiction), or the tenants would need to leave voluntarily. Given the existing lease agreement and the tenants stated position, neither outcome is likely.
In any case, the contract remains valid through the transfer of ownership. Not only are your posts wrong, they demonstrate a very unethical and juvenile attitude towards R.E. investing and other people on these boards.
I have a deal where the house is worth $213k, I got the only underlyng lender to accept $152.5k as payoff in full.
The house is owned by an out of state owner, who was renting the home. The tenant wants to buy the home but has just filed bankruptcy., chapter 7. They probably wont be able to buy for years.
This was by far the easiest short sale i’ve ever done. There was no BPO, and they accepted my first offer of $152.5k.
Here’s the complicated part.
The tenant has an option to purchase at $188k, which expires next september. The seller conveniently forgot to mention this to me.
I’ve got a buyer to purchase at $175k, but they want the tenant outta there. To leave, the tenant is demanding $8k, and nothing less. Seller wants nothing.
Plus, this is a short sale, so I cannot get the regular retail buyers unfortunately. Lender wont allow seller to profit.
Posted by Ned Carey on October 05, 2005 at 01:10:51:
Boy I love complicated stuff. Let me add another complication. Contrary to what PJ says, if the tenant has an option, then even if you buy and go to settlement, the tenant may come back cause title nightmares. I wouldn’t want to take that risk.
Title insurance won’t help. If it is recorded you will not get insurance or at least there will be an exception for the option. If it is not recorded, well title insurance only covers stuff recorded in the public records.
But here is the other complication I was speaking of; Since you know of the option, if you proceed you are commiting a tort. It is called interference with a contract. The tenant can sue you for interfering with his contract with the owner.
I suggest you talk to a lawyer. Newsgroups are not the best place to get legal advise.
I can;t imagine that no one wants to know who the lender is… Sounds like a good deal on your part, and maybe a sign that the lender may have some issues, if they are willing to waive the white flag so easily…
Info like this comes in handy once in a while, so who is the Lender…? Is it comm’l or residential sfh use property…? Interesting, and nice deal…
Posted by ken in sc on October 04, 2005 at 07:08:33:
First and foremost, get your hands on the option paperwork and read it. It will tell you a lot. Is the option recorded? If it is, you will have a hard time closing the short sale without paying the 8K to the option tenant. As was said before, the option may be nullified by now due to the BK or a missed payment.
I would probably buy this deal, not assign it. Then, it is likely that sometime in the near future the tenant will miss a payment or something to nullify their option. If not, you can just collect rent until the tenant either exercises the option (stanger things have happened given todays lending practices) or the option expires. Or they may not pay rent and then you evict. It seems to me that you need to actually buy this property and then wait until you can legally sell it. It is a good deal, so find the financing and wait it out.
Is the tenant paying rent? Have you read the option agreement? Failure to pay and filing bk. my render the option contract voidable. Did the tenant/debtor list the option in the bk? He should have—bk. courts view option contracts as executory contracts–the Trustee can set aside executory contracts- or he could auction the option but that’s unlikely here as the numbers are likely too small. If you point these things out to the tenant (perhaps from your attorney to his bk. attorney) you may be able to get a good deal. The problem is the tenant/debtor will have to turn the money over to the bk. court.
If the tenant buyer has a valid lease option till september and now pays you the rent on time, then there is nothing you can do about paying the 8K. Read the lease contract with the tenant, you might find something that is not right in it. In the first place you should have read the lease agreement before you bought it.
C’mon—a tort? You’re right newsgroups are not good places to get legal advice. The seller has marketable title- he can sell to a third-party buyer and the buyer takes subject to the lease option. No tortious conduct involved. As I said below we don’t know the status of the option–filing bk. and failure to make timely rent payments may be a breach of the option agreement. Assuming the numbers are as Luke suggests then this is good deal.
Re: Are you really responsible? - Posted by Kristine-CA
Posted by Kristine-CA on October 04, 2005 at 10:55:36:
PJ: a lease and an option , (whether separate or together) can not be
ignored. Even if the docs are not recorded, the tenant could tie up
the property and muck up the title by going to court.
I don’t know where you get the idea that the only thing that the tenant
can do is sue. Do you have any experience with leases or options at
all? You can’t just kick out a tenant with a lease. Or can’t just ignore
an option agreement–unless you don’t mind a little title flaw.
Posted by Ned Carey on October 05, 2005 at 08:51:36:
>The seller has marketable title- he can sell to a third-party buyer and the buyer takes subject to the lease option.
Excellent point, the property could be taken “subject to” the option, I hadn’t considered that. Normaly that would be a risk I wouldn’t take. However based on the description of the tenant that may be a very modest risk. And the tenants option price may guarantee a profit!
However we don’t know what’s in the lease option contracts. Is there something in there preventing a purchase subject to the option? Not likely but possible. If so we are back to the tort.
I point out the tort possiblity because there are people in competitive markets like mine that are trying to steal deals that are under contract. Some people may not be away this is a tort and subject to legal action.
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Kristine, I don’t think you understand the situation at hand. Read the original post more closely.
The PREVIOUS Owner has a lease with the tenants.
The PREVIOUS Owner is in foreclosure and hence LUKE-NC here is working a short sale.
AFTER LUKE-NC closes on the house, there is nothing the tenant can do except sue the PREVIOUS owner for non-performance.
BEFORE LUKE-NC closes on the house, the tenant can put a lien on property, which I believe is what your point is.
However, tenant probably doesn’t know Owner is in foreclosure and probably doesn’t
know how to do a short sale either.
The tenant cannot sue or put a lein on a house AFTER its been sold to our guy.
(well, technically they can…anyone can put a lein at anytime, but it would be invalid)
If our LUKE-NC has not bought the house yet… and the tenant knows the owner is in foreclosure, the tenant obviously has the first right to buy that house & can file a lien or stop
the sale, which I believe is your point.
However, once our guy buys that house… aint much the tenant can do… besides sue the previous owner.
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